Section 80C

Section 80C of the Income Tax Act, 1961, provides deductions up to ₹1,50,000 per financial year on qualifying investments and expenses. For FD investors, the relevant instrument is the 5-year tax-saving Fixed Deposit offered by scheduled banks and post offices (not NBFCs). The principal amount invested (up to ₹1,50,000) is deductible from taxable income. However, the interest earned on tax-saving FDs is fully taxable at your slab rate — there is no tax exemption on the returns, only on the investment. The FD has a strict 5-year lock-in with no premature withdrawal allowed. Joint holding is permitted, but the tax benefit goes only to the first holder. Section 80C deduction is available only under the old tax regime. Other 80C-eligible investments include PPF, ELSS mutual funds, EPF, NSC, life insurance premiums, and home loan principal repayment.