Investments · Tax saving

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Section 123, old regime only Three-year ELSS lock-in

Read this first

The deduction may not be available to you at all

The Income Tax Act, 2025 replaced the 1961 Act on 1 April 2026. Section 80C is now Section 123, with the same ₹1.5 lakh limit. That part is only a change of name.

What actually matters is that the new tax regime has been the default since AY 2024-25 and does not permit Section 123 deductions at all. To claim them you must opt into the old regime by filing Form 10-IEA — and for many taxpayers the new regime costs less even with the full ₹1.5 lakh claimed.

So the first step is not choosing an ELSS fund. It is finding out which regime you should be on. Our regime calculator answers that in about thirty seconds, and it is free.

If the old regime does suit you

What already counts

Add up what you are already committing before investing anything new. Your EPF contribution counts. So does the principal portion of your home loan EMI, your life insurance premium, your children’s tuition fees, PPF, NSC and Sukanya Samriddhi.

Plenty of people discover they have far less headroom than they assumed — and a few discover they were already at the limit and have been buying ELSS every March for no tax benefit whatsoever.

EPF · home loan principal · life insurance premium · tuition fees · PPF · NSC · Sukanya Samriddhi
The ceiling is ₹1.5 lakh across all of them combined, not each

ELSS

The shortest lock-in of the lot

Of the options that fill remaining Section 123 headroom, ELSS has the shortest lock-in — three years, against five for a tax-saving fixed deposit and fifteen for PPF — and it is the only one invested in equity. Which also makes it the only one that can fall in value. That is the trade, stated plainly.

Each instalment is locked for three years from its own date, so a monthly SIP into ELSS unlocks in monthly tranches rather than all at once.

Three-year lock-in per instalment, not per investment
Equity risk — it can and does fall
Invest through the year rather than in March

FAQ

Questions people actually ask

Which regime am I on?

The new one, unless you or your employer actively chose otherwise — it has been the default since AY 2024-25. Check what it costs you either way with the regime calculator.

Should I stop my existing ELSS?

Not because of this. If the new regime suits you the tax benefit is gone, but the fund may still be a perfectly good investment on its own merits. What should stop is buying it for the deduction.

Why does everyone still say 80C?

Habit, and a great deal of material written before April 2026. The section number changed; the ₹1.5 lakh limit did not. Both names refer to the same relief.

Is this tax advice?

No. It is general information, and it deliberately covers one deduction. Your position depends on things a web page cannot see. Talk to us, or to a tax professional, before acting.

Check the regime first

It takes thirty seconds and it changes the answer completely.

Talk to us about tax planning Call +91 88067 78771

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