Section 80C
A deduction of up to Rs 1.5 lakh a year available under the old tax regime.
Eligible items include EPF, PPF, ELSS, life insurance premium, tax-saving FDs, principal on a home loan and tuition fees. The deduction is not available under the new regime.
Why Section 80C matters when comparing products
Section 80C deductions significantly influence financial product choices for individuals opting for the old tax regime in India. Products offering 80C benefits can reduce taxable income, potentially lowering tax outgo. When comparing investment or savings instruments, considering their 80C eligibility helps assess their net benefit, especially since this deduction is unavailable under the new tax regime, altering their relative attractiveness.
Illustrative example
Suppose an individual's taxable income is Rs 10 lakh. Under the old regime, investing Rs 1.5 lakh in an 80C-eligible product reduces their taxable income to Rs 8.5 lakh. If a product offers 80C benefits, say a tax-saving FD, it helps save taxes directly. Without this deduction, under the new regime, the full Rs 10 lakh would be taxed, making other investment considerations more prominent.