Can I claim 80C deductions in the new tax regime?

Part of the Zero to One series — Chapter 2: Old vs new tax regime. Lesson 2 follows on from Lesson 1 (which tax regime is better). For informational purposes only — not tax advice.

No. Section 80C deductions are not available under the new tax regime.

This is probably the single most consequential feature of the new regime — and the one most people misunderstand. Your EPF contribution still happens every month (it is mandatory). Your PPF deposit still goes in. Your ELSS investment still stays in the fund. None of that stops. But the deduction — the part that reduces your taxable income — does not exist under the new regime.

This lesson explains exactly what you lose, what limited deductions remain, and what this means for how you should think about investing under the new regime.

What 80C deductions are — and why they matter

Under the old tax regime, Section 80C allows you to reduce your taxable income by up to ₹1,50,000 per year through specific investments and expenses: EPF contributions, PPF deposits, ELSS, life insurance premiums, home loan principal, tuition fees, and others.

If you are in the 20% tax bracket, ₹1.5L of 80C deductions saves you ₹30,000 in tax. If you are in the 30% bracket, the saving is ₹45,000. This is why 80C is the first thing tax-saving articles discuss.

Under the new tax regime, the entire Section 80C chapter does not apply. The deduction is zero, regardless of how much you invest.

What you lose when you switch to the new regime

What deductions remain under the new regime

The new regime is not entirely deduction-free. Three meaningful deductions survive:

1. Standard deduction: ₹75,000

This is the most significant. Available to all salaried employees automatically — no investment required, no submission needed. In the old regime, the standard deduction is ₹50,000. The new regime's ₹75,000 gives it a ₹25,000 head start.

2. Employer NPS contribution: Section 80CCD(2)

If your employer contributes to your NPS Tier 1 account, that contribution (up to 14% of basic salary) is deductible from taxable income under the new regime. This is one of the most underused levers in the new regime — ask HR if your company offers an employer NPS contribution as part of CTC restructuring.

3. Agniveer Corpus Fund contribution: Section 80CCH

Specific to Agniveer scheme participants. Not broadly applicable.

That is the complete list of meaningful deductions available in the new tax regime for salaried employees.

The important clarification: your investments still happen

Switching to the new regime does not mean you should stop investing. It means those investments do not reduce your taxable income.

Your EPF contributions still accumulate at 8.25% tax-free. Your PPF balance still earns 7.1% tax-free and matures tax-free. Your ELSS still grows with the market and will eventually be redeemed subject to LTCG rules.

The investment outcomes are identical. The tax treatment of the contribution changes — you no longer get an upfront deduction. The backend treatment (interest and maturity tax-free for EPF and PPF, LTCG for ELSS) is unchanged.

Practical implication: Under the new regime, the case for choosing ELSS specifically for tax saving disappears — there is no 80C benefit. But ELSS is still a valid equity investment with a 3-year lock-in. The question is simply whether a regular equity mutual fund (without the lock-in) suits you better. Many investors in the new regime prefer a standard diversified equity fund with no lock-in over ELSS, since the lock-in was the trade-off for the 80C benefit that no longer applies.

When does the maths still favour the old regime?

Given the loss of deductions, many salaried employees on the new regime are better off — especially at incomes below ₹15 lakh where the 87A rebate and lower new regime rates dominate. But at higher incomes with significant deductions, the old regime can still win.

The break-even comes from accumulating enough deductions under the old regime to overcome the new regime's rate advantage. Lesson 1 showed that for Deepika on ₹12L, the new regime saved ₹1.08L. But someone with a large home loan (₹2L interest deduction), full 80C (₹1.5L), NPS (₹50K), and HRA exemption (₹1L) — total deductions of ₹5L — may find the old regime gives a lower tax bill at ₹18–25L income.

The calculation is specific to your numbers. There is no universal answer.

What this means for how you invest under the new regime

If you are on the new regime, your investment decisions are no longer driven by tax-saving requirements. Instead:

• Invest in equity funds (Direct Plan) for long-term growth — no lock-in pressure
• Contribute to EPF/VPF for guaranteed, tax-free returns at 8.25%
• Maximise employer NPS contribution if available (80CCD(2) deduction remains)
• PPF is still worth contributing to for tax-free guaranteed returns — just without the upfront deduction benefit

The new regime simplifies the tax calculation and removes the pressure to invest in specific instruments by a specific date for tax purposes. The trade-off is that you lose the deductions that many old-regime investors use to significantly reduce their taxable income.

The next lesson examines one specific deduction question that comes up often: is health insurance premium deductible in the new tax regime?

Sources: New vs old tax regime FAQs, Income Tax Department · Section 80C, Income Tax Department

Last verified: June 2026. Tax rules are as per Finance Act 2025 for FY 2025-26. Verify at incometax.gov.in.