How to Claim Section 80C Deduction in India: Complete Filing Process
Every year, millions of salaried Indians miss out on thousands of rupees in tax savings-not because they don’t qualify, but because they don’t know how to claim Section 80C properly. If you’re earning a salary in India and paying taxes, you’re eligible for up to ₹1.5 lakh in deductions under Section 80C of the Income Tax Act. But filling out your ITR with the right documents, choosing the right investments, and avoiding common mistakes? That’s where most people get stuck.
What Is Section 80C and Why Does It Matter?
Section 80C is a tax-saving provision that lets you reduce your taxable income by investing in approved instruments. The maximum deduction you can claim is ₹1.5 lakh per financial year (April 1 to March 31). That means if you earn ₹12 lakh a year and invest ₹1.5 lakh under 80C, your taxable income drops to ₹10.5 lakh. For someone in the 30% tax bracket, that’s a direct tax saving of ₹45,000.
This isn’t a loophole-it’s a government incentive to encourage savings in areas like retirement, education, and home ownership. The rules haven’t changed since 2023, and they won’t change in 2026. The limit is still ₹1.5 lakh, and the list of eligible investments is fixed by the Income Tax Department.
Eligible Investments Under Section 80C
You can’t just throw money into any savings account and call it a deduction. Only specific instruments qualify. Here are the top 8 that most people use:
- Public Provident Fund (PPF): 15-year lock-in, currently offers 7.1% interest (as of Q4 2025), tax-free maturity.
- Employee Provident Fund (EPF): Your contribution (12% of basic salary) is automatically eligible. Employer’s share doesn’t count.
- Life Insurance Premiums: Premiums paid for yourself, spouse, or children. Term plans qualify, but not policies with no death benefit.
- Equity-Linked Savings Scheme (ELSS): Mutual funds with 3-year lock-in. Historically, these deliver 12-15% annual returns over 10 years.
- Tax-Saving Fixed Deposits: 5-year lock-in, interest is taxable, but principal qualifies for deduction.
- National Savings Certificate (NSC): 5-year tenure, interest is reinvested and qualifies for 80C, but taxed on maturity.
- Principal Repayment on Home Loan: Only the principal portion, not interest. Must be for a self-occupied property.
- Sukanya Samriddhi Yojana (SSY): For girls under 10. 21-year lock-in, 8.2% interest (2025 rate).
Don’t confuse this with Section 80CCC (pension plans) or 80CCD (NPS). Those are separate and stack on top of 80C, but only ₹1.5 lakh total can be claimed under 80C.
How to Calculate Your 80C Deduction
Let’s say you’ve made these investments in FY 2025-26:
- ₹50,000 in EPF
- ₹30,000 in PPF
- ₹20,000 in ELSS
- ₹25,000 in life insurance premium
- ₹15,000 towards home loan principal
Total = ₹1.4 lakh. You’re under the limit. You can still invest ₹10,000 more-maybe in a tax-saving FD-to hit the full ₹1.5 lakh.
But here’s the catch: if you invest ₹1.6 lakh, you still only get ₹1.5 lakh deduction. The extra ₹10,000 gives you zero tax benefit. So plan ahead. Don’t wait until March to scramble.
Step-by-Step: How to Claim Section 80C When Filing ITR
Claiming this deduction isn’t optional-it’s mandatory if you want the benefit. Here’s how to do it right:
- Collect all proof of investment: This includes PPF passbook statements, EPF contribution slips, ELSS folio statements, insurance premium receipts, home loan principal repayment certificates from your bank.
- Log in to the Income Tax e-Filing portal: Go to www.incometax.gov.in and use your PAN and password.
- Select ITR form: Most salaried individuals file ITR-1 (Sahaj). If you have income from more than one source or capital gains, use ITR-2.
- Go to the ‘Income from Salary’ section: Enter your salary details as per Form 16. The portal will auto-fill your gross salary and tax deducted at source (TDS).
- Click on ‘Deductions under Chapter VI-A’: This is where you declare your 80C investments. You’ll see a field labeled ‘Section 80C’ with a box to enter the total amount.
- Enter ₹1,50,000 or your actual investment: Even if you invested less, enter only what you actually paid. Don’t fake numbers.
- Upload documents if asked: The portal doesn’t always require uploads, but keep everything handy. The department may ask for proof later.
- Review and submit: Double-check your total deductions. Click ‘Submit’ and generate the ITR-V.
- Verify your return: You have 120 days to verify using Aadhaar OTP, e-sign, or physical signature.
Pro tip: If your employer already deducted tax based on your 80C declaration (submitted via Form 12BB), your Form 16 will show the deduction already applied. But you still need to declare it in your ITR to avoid mismatch notices.
Common Mistakes That Trigger Notices
The Income Tax Department uses AI to match your ITR with data from banks, mutual funds, and insurers. Here’s what triggers a notice:
- Claiming ₹1.5 lakh but only investing ₹80,000.
- Claiming life insurance premium for a policy on your sibling (only spouse and children qualify).
- Claiming tuition fees for more than two children (only two qualify under 80C).
- Claiming home loan principal for a second house (only self-occupied property qualifies).
- Using a non-80C instrument like gold ETFs or direct equity (they don’t qualify).
One taxpayer in Bengaluru got a notice in 2024 because he claimed ₹1.5 lakh in ELSS but the AMC records showed only ₹1.2 lakh was invested. He had to pay ₹9,000 in tax plus penalty.
When to Invest to Maximize Your Benefit
Don’t wait until March. If you invest ₹1.5 lakh on March 30, you still get the deduction-but you lose out on compounding. For example:
- Invest ₹1.5 lakh in ELSS on April 1, 2025 → your money grows for 364 days before lock-in ends.
- Invest ₹1.5 lakh on March 30, 2026 → your money grows for only 1 day.
That’s not just about tax-it’s about money growth. Spread your investments monthly. Set up SIPs in ELSS or auto-debit in PPF. It’s easier, disciplined, and helps average out market risk.
What Happens If You Miss the Deadline?
If you didn’t invest by March 31, you can’t claim the deduction for that financial year. There’s no carry-forward. No extension. No grace period. The deadline is absolute.
But here’s the good news: you can plan for next year now. Use a simple spreadsheet or free app like ClearTax or ETMoney to track your 80C investments. Set monthly reminders. You’ll never miss it again.
Section 80C vs Other Deductions: Don’t Overlap
Many people confuse 80C with other sections:
- Section 80D: Health insurance. ₹25,000 for self, ₹50,000 for parents. This is separate from 80C.
- Section 80CCD(1B): Additional ₹50,000 for NPS contributions. This is extra on top of ₹1.5 lakh under 80C.
- Section 24: Home loan interest deduction. Up to ₹2 lakh. Also separate.
You can claim all of these together. But only ₹1.5 lakh total can come from 80C. So don’t double-count. If you paid ₹1.5 lakh in EPF, don’t add your home loan principal again unless it’s under ₹1.5 lakh total.
Final Checklist Before You File
Before you hit ‘Submit’ on your ITR, run through this:
- Did I invest in only approved 80C instruments?
- Is my total investment ≤ ₹1.5 lakh?
- Do I have proof for every claim (receipts, statements, certificates)?
- Did I include EPF contributions from my salary?
- Did I exclude interest on NSC or PPF? (They’re tax-free but not part of 80C claim.)
- Did I verify my ITR within 120 days?
If you answered yes to all, you’re done. No more stress. No more notices. Just savings.
Can I claim Section 80C if I’m self-employed?
Yes. Section 80C applies to all individuals, whether salaried or self-employed. You can claim deductions for PPF, ELSS, life insurance, home loan principal, and other eligible investments. The only difference is that self-employed people don’t get EPF contributions automatically, so they must make these investments themselves.
Can I claim tuition fees under Section 80C?
Yes, but only for full-time education of up to two children. Fees paid for nursery, coaching, or part-time courses don’t qualify. The payment must be to a recognized school or university in India. Keep the fee receipt with your records.
Is the interest earned on PPF taxable?
No. PPF follows the EEE status: Exempt-Exempt-Exempt. Your investment qualifies for deduction (Exempt at contribution), interest grows tax-free (Exempt at accrual), and the maturity amount is completely tax-free (Exempt at withdrawal). This makes it one of the most efficient 80C instruments.
Can I claim 80C for investments made in my parents’ names?
No. You can only claim deductions for investments made in your own name, your spouse’s name, or your children’s name. Investments in your parents’ or siblings’ names do not qualify, even if you paid for them.
What happens if I withdraw from PPF before 15 years?
Partial withdrawals are allowed after 7 years, but only up to 50% of the balance at the end of the 4th year. Early withdrawal reduces your total 80C benefit for the year you made the contribution. Also, if you close the account before 15 years, the interest becomes taxable.
Do I need to submit proof to the IT department when filing ITR?
No, you don’t need to upload documents while filing ITR online. But you must keep all proof-receipts, bank statements, folio details-for at least 6 years. The department can ask for them during an assessment, and failing to produce them can lead to disallowance of deduction and penalties.
Next Steps: Make 80C Part of Your Routine
Section 80C isn’t a one-time task. It’s a yearly habit. Set up automatic transfers to your PPF or ELSS. Review your investments every January. Update your employer with new declarations if you’ve changed plans. Use a simple Excel sheet or free app to track your progress.
If you’re unsure about which instrument to pick, start with EPF (if you’re salaried), then add PPF for long-term safety, and ELSS for growth. That’s a solid 80C portfolio for most people.
Don’t let confusion cost you money. The system is simple. The rules are clear. You just need to act before March 31.
