How To Claim Rs 1.5 Lakh Tax Benefit In Section 80C: From Pensions, PPF, To Sukanya Samriddhi Yojana Accounts

Section 80C of the Income Tax Act is one of the most popular clauses introduced by the regulatory department, which allows taxpayers to claim up to Rs 1.5 lakh tax deductions on their investment schemes. These in general terms reduce the tax payout from the pockets of the common man. These investment options are of a wide range from market-linked to fixed-income products.

To claim a tax benefit of Rs 1.5 lakh under section 80C, you need to have your extra money either from income or income from other sources parked into investment schemes.

Here are some of the popular investment schemes as per ICICI Prudential Life which has the tax exemption under section 80C:

1. ELSS funds: Equity-Linked Savings Scheme is a type of mutual fund that invests in equity and equity-related instruments. ELSS funds have a lock-in period of three years.

2. National Pension Scheme: The National Pension Scheme is a government-backed savings scheme for employees of private, public, and unorganised sectors. It cannot be used for investment by the armed forces. The NPS has a lock-in period for up to the age of 60 years.

3. ULIPs: A Unit-Linked Insurance Plan (ULIP) is a life insurance plan that offers investment opportunities along with a life cover. It offers the choice to invest in equity, debt and hybrid funds to fulfil your financial goals. The returns from a ULIP can vary based on the funds you choose. ULIPs have a five-year lock-in period.

4. Tax saving fixed deposits: These types of fixed deposits offer tax benefits subject to conditions under Section 80C of the Income Tax Act, 1961. They have a lock-in period of five years. Fixed deposits offer fixed returns.

5. Public Provident Fund: PPF is a government savings scheme that can be used for long-term financial goals. It matures 15 years after the date of account opening. However, you can withdraw money from your PPF account every year from the seventh financial year.

6. Senior Citizen Savings Scheme: It is a savings scheme for people over the age of 60. However, it can be used by people over 50 and 55 years under some special circumstances. It has a lock-in period of five years, after which it can be closed or extended for another three years.

7. Sukanya Samriddhi Yojana: The Sukanya Samriddhi Yojana is a savings scheme backed by the Government of India. It is an investment option for parents who have a girl child. The plan matures when the girl child reaches the age of 21.

As per the ICICI Prudential website, there are limits to the amounts that can be claimed for different activities and the total that can be claimed under these activities.

These exemptions can be claimed by filing ITR forms.

According to the Income Tax Department, the ITR-1 Form is required to be filed by taxpayers for claiming tax deductions under section 80C. ITR-1 aka Sahaj is the most common income tax return form for filing taxes.

ITR-1 Sahaj can be filed by a resident individual having income up to Rs. 50 lakh and who receives income from salary, one house property, other sources (interest etc.) and agricultural income up to Rs. 5 thousand.

Deductions under section 80C are allowed to be claimed under ITR-1.To file ITR-1 you will need to download AIS and keep copies of Form 16, house rent receipt (if applicable), and investment payment premium receipts (if applicable). However, ​​ITRs are annexure-less forms, so you are not required to attach any document (like proof of investment, or TDS certificates) along with your return (whether filed manually or electronically). However, you need to keep these documents for situations where they need to be produced before tax authorities such as assessment, inquiry, etc.

Form 16 is the certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. There are two types of Form 16 namely 16A and 16B. These certificates provide details of TDS / TCS for various transactions between the deductor and deductee. Employers must issue these certificates to taxpayers.

Employers allow employees to claim benefits of section 80C by declaring their investments, which is further detailed in these forms. As per Bajaj Finserv's website, part B of Form 16B contains a detailed breakdown of how your tax was computed considering the investment declaration you made at the beginning of the financial year and the proof of investment submitted afterwards. Form 16B also includes detailed deductions under section 80C.

Apart from this, linking of Aadhaar and PAN is important. However, you would still be able to file your ITR if your PAN is not linked with Aadhaar, but you will have limited access to the portal. It is therefore advisable to link PAN with Aadhaar.

Any excess tax paid by you can be claimed as a refund by filing your Income Tax Return. After your return is processed, ITD checks and accordingly accepts your refund claim, and then the amount is credited to your bank account. You will also get a message on your email ID registered on the e-filing portal, as per the guidelines.