The working of overall deduction u/s. 80C is quite complex with several internal caps and overall cap to be computed with reference to other provisions.
For instance, for children tuition fees, there is internal cap of Rs. 12,000 per child upto two children. For premium on life insurance policies, internal cap is 20% of sum assured and so on. Similarly, there is internal cap of Rs. 1,20,000 on eligible term deposits with banks.
The overall cap of Rs. 1,50,000 applies jointly to s.80C, 80CCC (pension policies) and 80CCD (New Pension Scheme)
The overall cap of Rs. 1,50,000 does not offer any meaningful benefit with multiple investments clubbed under one single provision.
DTC 2013 had attempted to classify deduction into incentives for savings (provident fund, superannuation fund and life insurance policy) and other expenses under separate provisions with independent deductions.
The deduction for different investments and expenditure should be simplified with separate provisions/sub-provisions for each investment with independent outer cap.