TaxFinancial Glossary
Section 80C
Definition
The most widely used tax deduction provision, allowing deduction of up to Rs 1.5 lakh from gross total income for specified investments and expenses. Eligible instruments include EPF, PPF, ELSS, life insurance premium, NSC, SCSS, 5-year FD, home loan principal repayment, and tuition fees for up to 2 children.
Why It Matters
Section 80C is available only under the old tax regime. At the highest slab (30% + cess), the maximum tax saving is approximately Rs 46,800 per year. For most salaried employees, EPF contribution already covers a significant portion of the Rs 1.5 lakh limit. Plan the remaining allocation between PPF and ELSS based on your risk tolerance and liquidity needs.