Tax-saving investments
under Section 80C compared

Short version: Section 80C lets you deduct up to ₹1,50,000 a year of eligible investments and payments, and NPS gets a further ₹50,000 under 80CCD(1B), but only if you choose the old tax regime. Before buying anything, check what you already pay. Then choose by goal: ELSS for growth, PPF for safety, NPS for retirement, insurance for protection.

First, which tax regime are you in?

According to the Income Tax Department (incometax.gov.in), the new tax regime is now the default. Under it, deductions under Chapter VI-A, which include 80C, 80CCD(1B), 80D and 80E, cannot be claimed, with limited exceptions such as the employer's contribution to NPS under 80CCD(2). Salaried taxpayers can choose the old regime, and the choice has rules about how often it can be changed, especially for those with business income.

So the first question is not "which 80C investment?" but "does 80C help me at all?" If the new regime works out cheaper for you even without deductions, an investment made only to save tax saves nothing. Work out your tax both ways first, with your tax preparer if needed.

One more note. The Income-tax Act, 2025 replaces the 1961 Act from tax year 2026-27 and renumbers its sections. This article uses the familiar names, popularly known as Section 80C and so on; confirm current limits and section references on incometax.gov.in or with your tax preparer before you file.

What already counts under 80C

The ₹1,50,000 limit is shared by many items, and most salaried people use part of it without trying:

• Your own contribution to EPF.
• Life insurance premiums for yourself, your spouse and children, subject to conditions.
• Tuition fees for up to two children.
• Principal repaid on a home loan.
• PPF, ELSS, Sukanya Samriddhi, NSC and five-year tax-saving bank deposits.

Add these up before investing more. Many families find they have already crossed the limit.

The four options compared

ELSS (equity-linked savings scheme). A mutual fund that invests mainly in equities, with a lock-in of three years, the shortest among common 80C options. Each SIP instalment is locked for three years from its own date. Returns are market-linked and can be negative over short periods; over long periods equity has the potential to grow faster than inflation, but nothing is assured. Gains on redemption are taxed as equity gains; see how mutual funds are taxed.

PPF (Public Provident Fund). A government-backed savings account with a 15-year tenure and limited withdrawal and loan facilities along the way. The interest rate is set by the government and revised from time to time. Low risk, low liquidity. Suits the part of your savings you want safe and do not need for a long time.

Life insurance premium. Premiums qualify under 80C, subject to conditions on the premium relative to the sum assured. The point of insurance is protection, not tax. A term insurance plan gives the most cover for the premium; plans that mix insurance and savings give less cover for the same money, so judge them on both counts, not on the deduction.

NPS (National Pension System). Your own contribution counts towards the same ₹1,50,000 limit (under Section 80CCD(1)), and an additional ₹50,000 under Section 80CCD(1B), over and above the ₹1,50,000. The money is meant for retirement and is largely locked until then, with partial withdrawals only for specified purposes and exit rules set by PFRDA. Suits someone who wants a disciplined retirement account and is in the old regime.

At a glance

• Lock-in: ELSS three years; PPF fifteen years with limited access; NPS largely until retirement; insurance for the policy term.
• Risk: ELSS market-linked; PPF government-backed; NPS depends on the asset mix you choose; term insurance has no investment element.
• Liquidity: ELSS after three years; PPF and NPS limited; insurance surrender values, where they exist, are usually poor in the early years.

Who each one suits

• A young salaried earner with years ahead: ELSS through an SIP fits well, alongside term cover.
• Someone who wants no market risk for this portion: PPF.
• Someone building a retirement pot in the old regime: NPS, using the extra ₹50,000 under 80CCD(1B).
• Anyone with dependants: term insurance first, for the cover, with the deduction as a bonus.

Avoid the March rush. Investing a lump sum in the last week of the financial year to "save tax" is how people end up in products they would never otherwise choose. A monthly SIP in ELSS, started in April, does the same job calmly. Our mutual funds and SIP page explains how we help.

Mutual fund investments are subject to market risks, read all scheme related documents carefully. MGR WealthPro is an AMFI-registered mutual fund distributor (ARN-307107). Insurance is the subject matter of solicitation. Tax rules change; this article is general information, not tax advice.