If you're on the old tax regime, Section 80C lets you cut your taxable income by up to ₹1.5 lakh a year — and a few other sections add to that. Here's how the popular options compare, and the catch the new regime introduces.
The main 80C options
- ELSS (tax-saver mutual funds): market-linked returns, shortest lock-in at 3 years
- PPF: government-backed, ~7%+ tax-free, 15-year lock-in — safe and steady
- Tax-saver FD: fixed return, 5-year lock-in, interest is taxable
- NPS: retirement-focused, an extra ₹50,000 deduction under 80CCD(1B)
- EPF & life insurance premiums also count toward the ₹1.5 lakh
Old regime vs new regime
The new tax regime has lower slab rates but removes most of these deductions. So the question isn't just 'which investment' — it's whether claiming deductions on the old regime beats the new regime's lower rates for you. For many people with a home loan, HRA and a full 80C, the old regime still wins; for those with few deductions, the new regime is simpler and cheaper.
Run both regimes with your actual income and deductions before you decide — the break-even depends entirely on your numbers.
Where to go next
FAQs
There's no single best — it depends on your risk appetite and horizon. ELSS suits long-term investors comfortable with market ups and downs; PPF and tax-saver FDs suit those who want certainty; NPS suits dedicated retirement saving with an extra ₹50,000 deduction.
Mostly no — the new regime removes 80C and most deductions in exchange for lower slab rates. If you want to claim these deductions, you generally need to be on the old regime. Compare both before filing.
Up to ₹1.5 lakh of investments/expenses can be deducted from taxable income under 80C, plus an extra ₹50,000 for NPS under 80CCD(1B). The actual tax saved equals that deduction times your slab rate.
Educational information, not financial advice. Figures are illustrative and assume the stated return or rate; actual outcomes vary and aren't guaranteed. Run your own numbers before deciding.