Section 80C Deductions: Complete List & Best Tax-Saving Options in 2026
Every Section 80C option ranked for FY 2026-27 - and why it only helps under the old tax regime
Section 80C lets you deduct up to ₹1.5 lakh a year from your taxable income, but only if you stay on the old tax regime. It covers EPF, PPF, ELSS, life insurance, NSC, tax-saver FDs, Sukanya Samriddhi, and home loan principal. A 30% taxpayer who uses the full limit saves about ₹46,800 in tax. For 2026, ELSS is the standout for wealth, while PPF and EPF win on safety.
Section 80C is the most used tax-saving rule in India. It lets you cut up to ₹1.5 lakh from your taxable income each year by investing in approved options. Under the new Income Tax Act 2025, this rule is renumbered as Section 123 from April 2026, but the ₹1.5 lakh limit and the list of options stay the same.
One thing matters most before you start. Section 80C works only under the old tax regime. If you file under the new regime, which is now the default, you cannot claim it at all.
The catch: old regime only
The new regime makes income up to ₹12 lakh tax-free through a rebate, plus a ₹75,000 standard deduction for salaried people. So most taxpayers below that level pay no tax and gain nothing from 80C.
The old regime, with its 80C and other deductions, usually wins only when your total deductions are large. Take a ₹16 lakh salary. The new regime charges about ₹1.13 lakh in tax. To beat that under the old regime, you would need close to ₹5.6 lakh of deductions, which is realistic mainly with a home loan. So treat 80C as a wealth tool first and a tax tool second.
Complete list of Section 80C options
Here are the main options and where they stand for FY 2026-27.
| Option | Lock-in | Return / rate | Tax on returns |
|---|---|---|---|
| ELSS (equity mutual fund) | 3 years | Market-linked | Equity LTCG: 12.5% above ₹1.25 lakh a year |
| EPF | Till retirement | 8.25% (FY 2025-26) | Tax-free |
| PPF | 15 years | 7.1% | Tax-free |
| Sukanya Samriddhi (girl child) | 21 years | 8.2% | Tax-free |
| Senior Citizens Savings Scheme | 5 years | 8.2% | Taxable |
| Tax-saver fixed deposit | 5 years | ~6.5-7.5% | Taxable |
| Life insurance premium | Policy term | Varies | Maturity often tax-free |
Three more items also count towards the limit: home loan principal repayment, children's school or college tuition fees, and the stamp duty paid when you buy a home.
Best tax-saving options for 2026
1. ELSS, for growth. An Equity Linked Savings Scheme is the only 80C option that invests in shares. It carries the shortest lock-in, just three years, and over long periods equity has beaten every fixed-return option here. Gains are taxed gently: 12.5% only on long-term profit above ₹1.25 lakh in a year. A monthly SIP into ELSS spreads the risk and builds the habit.
2. PPF and EPF, for safety. Both are tax-free at every stage, which is rare. PPF pays 7.1% and suits the cautious or the self-employed. EPF pays 8.25% and works in the background for salaried staff. Treat these as the bond part of your plan, similar to a debt fund but with a sovereign guarantee.
3. NPS, for an extra deduction. The National Pension System gives a separate ₹50,000 deduction under Section 80CCD(1B), over and above the ₹1.5 lakh cap. For a 30% taxpayer, that single step saves ₹15,600 more in tax. It locks money until retirement, so use it only for that goal.
4. Sukanya Samriddhi, for a daughter. At 8.2% and fully tax-free, it is the best fixed-rate option for a girl child's future.
How much tax do you actually save?
The deduction lowers your taxable income, so the saving depends on your slab. A person in the 30% bracket who invests the full ₹1.5 lakh saves about ₹46,800 (including 4% cess). A 20% taxpayer saves about ₹31,200, and a 5% taxpayer saves about ₹7,800. Add the NPS step, and a 30% taxpayer can save up to ₹62,400 in a year.
Mistakes to avoid
- Buying insurance for tax: traditional plans mix coverage with poor returns. Take term cover separately and invest the rest.
- Investing in March only: a rushed lump sum leads to weak choices. Start a SIP in April instead.
- Ignoring the regime check: compare both regimes on the income tax slab before you lock money for 80C.
- Over-funding low-return options: do not park the full ₹1.5 lakh in a 6.5% FD when ELSS or PPF can do more.
Section 80C still rewards disciplined savers, but only on the old regime. Pick the option that matches your goal first, check that the old regime actually lowers your tax, and start early in the year. For most long-term investors, an ELSS equity plan paired with PPF gives the best mix of growth and safety.
Sources: Income Tax Department (Sections 80C, 80CCD and the Income Tax Act 2025); Ministry of Finance small savings rate notification for April-June 2026; EPFO. Rates and rules as of June 2026.