Section 80C (now section 123) for FY 2026-27

Section 123 is the deduction people still call 80C. For FY 2026-27, assessment year 2027-28, the form uses 123. The money that qualifies is listed in Schedule XV. The most you can deduct is ₹1,50,000.

This matters only if you leave the new regime. Section 202 is the default. It computes total income without Chapter VIII, except employer NPS under section 124(1) and 124(2), the Agniveer corpus deduction, and section 146. Section 123 is not on that short list. If you stay in section 202, none of the payments below reduce your tax.

FY 2025-26 is different. That return still uses the Income-tax Act, 1961, so the line on the form is still 80C. The section number guide is the crosswalk. This page is the list for the year that starts on 1 April 2026.

One cap, many payments

Section 123 allows the whole of what you paid or deposited in the tax year, being the sums in Schedule XV, as does not exceed ₹1,50,000. Read that twice. The Act adds the payments together, then stops at the cap. It does not give each payment its own cap.

Employee PF, PPF, ELSS, life insurance and the principal of a home loan are the ones most salary earners mix up. They share the basket. A person who already has ₹1,50,000 going into PPF has used the whole tax cap, even though the PPF scheme itself also stops at that deposit. Adding an ELSS SIP does not create a second deduction. It only fills a cap that is already full.

The cap also cannot exceed gross total income. Section 122(2) says the Chapter VIII deductions together cannot be more than that income. You cannot create a refund out of a deduction that is larger than the income it is deducted from.

Section 202 does not take the cap away by raising it to zero in a footnote. It tells you to compute income without the chapter. The old versus new guide shows, salary by salary, how large the old-regime deductions have to be before the old regime costs less. Section 123 alone is often not enough once salary is high. Run your own numbers on the regime calculator before you buy a product only for this line.

The list people actually use

Schedule XV, paragraph 1, is the complete list. These are the lines a household usually means.

Table: Common section 123 payments

PPF maturity is a different question from the deposit deduction. The deposit, in the old regime, is section 123 read with Schedule XV, paragraph 1(e). The maturity treatment is Schedule II, which was Section 10(11). The PPF calculator compounds the deposit. It does not file the return.

Sukanya deposits can also be claimed here, outside section 202, inside the same cap. The scheme’s own yearly ceiling is ₹1,50,000. The comparison of PPF, ELSS and NPS is the place to see how the three big choices behave after the deduction.

A life policy that you drop too soon does not keep the deduction. Paragraph 4 says a single-premium policy terminated within 2 years, or any other policy that did not collect 2 years of premium, is disallowed, and the deductions already allowed are treated as income. A ULIP participation that does not last 5 years is treated the same way.

The rest of Schedule XV

The schedule does not stop at the popular lines. These also qualify, subject to the same ₹1,50,000 and to the conditions written next to them.

• A deferred annuity without a cash option, on your life, your spouse or your child, other than the pension annuity in paragraph 1(l).
• A sum the government deducts from salary for a deferred annuity for your spouse or children, up to 20% of salary.
• A contribution to a provident fund to which the Provident Funds Act, 1925 applies.
• An employee’s contribution to an approved superannuation fund.
• A notified security or deposit scheme in your name, or in the name of a girl child, including a girl for whom you are the legal guardian.
• Notified savings certificates under the Government Savings Banks Act, 1873. National Savings Certificates are the usual example.
• The Unit-linked Insurance Plan, 1971, and a notified unit-linked plan of the LIC Mutual Fund, in the names the paragraph allows.
• A notified annuity plan of LIC or another insurer.
• A contribution to a notified pension fund of a mutual fund, the UTI Administrator, or the specified company.
• A notified National Housing Bank deposit or pension fund, and notified deposits of a public-sector housing financier or a housing authority.
• Subscription to notified NABARD bonds.
• A Central Government employee’s extra pension-account contribution, for at least 3 years, under a scheme notified for paragraph 1(w). This is not the general NPS line.
• A pension annuity from the fund in Schedule VII, table item 3. Paragraph 5 taxes the surrender and the pension.
• Shares or debentures in an eligible issue of capital approved by the Board, and certain mutual-fund units that subscribe only to such an issue. Selling within 3 years undoes the deduction.

Paragraph 6 says a contribution does not include repayment of a loan. Putting money back into a fund because you borrowed from it is not a fresh deduction.

If a payment is not in paragraph 1, it is not section 123. A random mutual fund, a recurring deposit, a normal fixed deposit, a credit-card bill, or rent is not on this list. Health insurance is section 126, which was section 80D. Donations are section 133, which was section 80G. Education-loan interest is section 129, which was section 80E. Those are separate sections, and section 202 drops them too.

What people add by mistake

The employee PF on a payslip is often already inside the ₹1,50,000. If you also type the full PPF deposit into the same box, you can count the same cap twice in your head. The income tax calculator caps the box at ₹1,50,000. It cannot see your payslip. You have to put in the total that is still inside the cap, not the total you wish you could claim.

Employer NPS is not this box. It is section 124(1) and 124(2). Section 202 keeps that one. The rate is 14.000000000000002% of salary in the new regime. In the old regime a private employer is at 10%, and a government employer stays at 14.000000000000002%. The NPS calculator states those limits beside the projection.

Health insurance is section 126. For a person under 60 the Act allows up to ₹25,000 for self and family, and a separate ₹25,000 for parents under 60. If the person covered is a senior citizen, that side becomes ₹50,000. Preventive check-up counts inside those caps and stops at ₹5,000. The calculator uses one combined ceiling of ₹1,00,000, which is the two senior caps added together. It does not apply the under-60 split. Do not treat that ceiling as permission to claim ₹1,00,000 when nobody on the policy is a senior.

Home-loan interest is not in this basket either. Use the home loan tax guide for section 22(1)(b), and for the old first-time buyer sections that a loan sanctioned in 2026 cannot use.

A salary of ₹20,00,000

Take a resident under 60, with salary of ₹20,00,000 and no other deduction. The standard deduction is still applied by the calculator, ₹50,000 in the old regime and ₹75,000 in the new one. Section 156, which was section 87A, is included. Cess is 4%.

Table: Tax at ₹20,00,000 of salary, from the same engine as the calculator

The section 123 cap cuts the old-regime bill by ₹46,800. The extra NPS cuts it by a further ₹15,600. The new-regime bill does not move. Those payments are ignored once section 202 applies. This is one salary, not a rule for every salary. A person closer to the rebate line can see a different rupee saving, including zero, because the tax was already small. Use the income tax calculator for your figure.

The saving is not a return on the investment. If you put ₹1,50,000 into a product you did not want, only to save ₹46,800 of tax, you have still spent the rest. In the new regime you would have spent it for a tax saving of zero. Buy PPF, ELSS or insurance because the product fits the year you need the money. Then see whether the old regime is cheaper.

How to use the number on the form

Add only payments that Schedule XV names, and only the portion the schedule allows. Stop at ₹1,50,000. Keep the receipt, the PF statement, the insurance premium receipt and the ELSS allotment. The form does not ask you to attach all of them up front. It does expect the figure to be true.

If you are filing FY 2025-26, write section 80C, not section 123. The ITR guide is that return. If you are planning FY 2026-27, decide the regime first. Section 123 is a choice you only get after you opt out of section 202. The calculators on this site use the FY 2026-27 labels.