Section 123 and Schedule XV – The ₹1,50,000 Savings Deduction (Old 80C) in the New Act
- Section 123 (old 80C) allows individuals and HUFs a deduction of up to ₹1,50,000 a year for the payments listed in Schedule XV.
- Schedule XV lists life insurance premium, provident fund, notified savings schemes, tuition fees for two children, house purchase payments, 5-year deposits and more.
- Chapter VIII deductions, including section 123, are not available in the new regime.
The old section 80C is now section 123, and the list of eligible payments moved to Schedule XV. The deduction is limited to ₹1,50,000 a year for an individual or HUF, and the payments must be those listed in the Schedule.
What Schedule XV covers
| Type of payment | Notes from Schedule XV |
|---|---|
| Life insurance premium | On your life, your spouse and any child. Only up to a percentage of the sum assured (see below) |
| Provident funds | Contribution to a provident fund under the Provident Funds Act, 1925, a notified Central Government provident fund, and an employee’s contribution to a recognised provident fund |
| Superannuation fund | Employee contribution to an approved superannuation fund |
| Savings schemes | Notified security or deposit schemes (including for a girl child), notified savings certificates, Senior Citizen Savings Scheme deposits, 5-year Post Office Time Deposit |
| Unit-linked and mutual-fund plans | ULIPs and notified mutual-fund units and pension funds |
| Annuity plans | LIC or other notified insurers’ annuity plans |
| Tuition fees | Full-time education of any two children at an Indian university, college, school or institution; development fees and donations are excluded |
| House purchase or construction | Payments for buying or constructing a residential house, subject to the conditions in paragraph 3 of the Schedule |
| Bank term deposit | Fixed period of at least five years with a scheduled bank under a notified scheme |
| NABARD bonds, National Housing Bank and housing-authority deposits | As notified by the Central Government |
| Pension scheme contribution | Up to 10% of salary (basic plus dearness allowance if the terms provide) for employees, or 20% of gross total income for others |
| Eligible equity issues | Subscription to approved equity shares, debentures or notified mutual-fund units |
The Schedule lists more items and notifications than shown here. Check the Schedule for the exact wording before claiming.
Life insurance premium limit
Paragraph 2 of Schedule XV says only the part of the premium up to a percentage of the actual capital sum assured qualifies: 20% for policies issued on or before 31 March 2012 and 10% for policies issued on or after 1 April 2012, with other percentages for certain special cases set out in the paragraph.
Overlaps with other sections
- Your own contribution to the pension scheme under section 124(3) is allowed up to ₹50,000, but you cannot claim the same amount again under section 123 (sections 124(5) and 124(10)).
- If you invest capital gains in NHAI or REC bonds under section 85, the same investment cannot be claimed under section 123 (section 85(5)).
Who can claim
Section 123 is a Chapter VIII deduction. If you are taxed under the default new regime, you cannot claim it. Choose the old regime only if your total deductions are large enough to beat the lower slab rates of the new regime.
Still have a question? Ask TAXBADI – get an answer from the Act, Rules and forms, with the exact sections cited.
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- Clubbing of Income – Section 99: When Spouse or Minor Child Income Is Added to Yours
- Filing Income Tax Return Late – Fee under Section 428 and Interest under Sections 423 to 425
This guide is for general information and is not tax advice. Tax figures are before health and education cess unless stated. The law and the official notifications are the final authority – see our Disclaimer. Found a mistake? Tell us.