Tax deduction: Can one claim Section 80C exemption on PPF, ELSS investments done in spouse's name?

Section 80C of the Income Tax Act lets individuals and Hindu Undivided Families (HUFs) claim deductions of up to Rs 1.5 lakh a year for certain eligible investments. This helps reduce your taxable income — and therefore your tax outgo — but only if you’re using the old tax regime, as the new regime doesn’t recognise this deduction. The Rs 1.5 lakh cap also includes deductions under Sections 80CCC and 80CCD(1).

Many taxpayers try to fully use this limit to cut their tax burden. But a common doubt remains: Can you claim Section 80C deductions for investments made in your spouse’s name?

According to CA Aditya Sesh, Founder & Managing Director of Basiz Fund Services, "Where a husband makes contributions to a Public Provident Fund (PPF) account or invests in Equity Linked Savings Scheme (ELSS) units held in his wife’s name, the deduction under Section 80C can be claimed by the husband, provided the payment is made directly from his own income and not by first gifting the money to the wife."

He added: "In the case of PPF, the law specifically permits contributions made in the name of a spouse or child to qualify for a deduction under Section 80C. Therefore, if the husband deposits funds directly from his own taxable income into the wife’s PPF account, he is eligible to claim the deduction, subject to the overall annual limit of Rs 1.5 lakh."

ELSS investments, however, operate differently. 

"Since ELSS is a mutual-fund based product, a conservative interpretation followed by many tax advisors is that the deduction is available only when the investment is made “by or in the name of” the taxpayer. Courts have historically taken a strict view, as seen in the 1972 decision in Late Appavoo Pillai. That said, later tribunal rulings such as Umesh Chand Gupta (2020) and Saraswati Ramanathan (2007) have acknowledged the practical realities of family financial planning in India, where investments are often made in family members’ names for estate planning, financial security and risk diversification. The emerging principle is that, in genuine cases, substance should prevail over form," Sesh explained.

"If the husband first transfers money to the wife as a gift, and she independently makes the investment, the husband cannot claim the Section 80C deduction. While such gifts to a spouse are not taxable in the wife’s hands, any income arising from that investment may still be clubbed back and taxed in the husband’s hands under Section 64(1)(iv). From a tax-efficiency perspective, direct contribution to the wife’s PPF account is the cleanest route. For ELSS, investing in the taxpayer’s own name remains the least disputed approach," he added.

Understanding Section 80C for tax saving 

Section 80C of the Income Tax Act, 1961 is one of the most widely used tax-saving tools—especially for those who continue with the old tax regime. It helps taxpayers reduce their gross total income, which in turn brings down their taxable income and overall tax liability for the financial year. One big reason it remains so popular is the sheer variety of investments and expenses it covers.

What Section 80C includes

Investments: You can claim deductions for contributions to instruments like PPF, EPF (employee share), ELSS mutual funds, National Savings Certificates, 5-year tax-saving fixed deposits, Sukanya Samriddhi Yojana, the Senior Citizens’ Savings Scheme, ULIPs, life insurance premiums, approved pension funds (Section 80CCC), and even the National Pension System (under Section 80CCD).

Expenses: Certain payments also qualify — such as the principal repayment on a home loan, stamp duty and registration charges for a new property, and tuition fees for up to two children studying full-time in India.

To help taxpayers compare their choices, here’s a simple look at how the most common 80C options stack up:

Investment Option	Average Interest	Lock-in Period
ELSS funds	12% – 15%	3 years
NPS Scheme	8% – 10%	Till age 60
ULIP	8% – 10%	5 years
Tax-saving FD	Up to 8.40%	5 years
PPF	7.10%	15 years
Senior Citizens’ Savings Scheme	8.2%	5 years (extendable by 3 years)
National Savings Certificate	7.7%	5 years
Sukanya Samriddhi Yojana	8.2%	Till the girl turns 21 (partial withdrawal allowed at 18)

Source: ClearTax

Across all these options, the maximum deduction you can claim under Section 80C is Rs 1.5 lakh per financial year, combining investments and eligible expenses.