It's always better to plan things well before on time so as to catch hold of right investment opportunities. This will help you to determine which tax-saving investment option suits you the best.

Let's have a look at some of the tax-saving options available:
The maximum deduction under 80C, 80CCF and 80D put together is Rs 1,50,000. This implies now you can invest up to Rs 1,50,000 for financial year 2011-12 under section 80C (Rs 1,00,000), under section 80CCF (Rs 20,000) and under section 80D (Rs 30,000). Apart from this, you can also save on your education loan expenses under section 80E.

Tax-saving instruments available under 80C (Maximum limit: 1,00,000):
You can invest a sum up to Rs 1,00,000 under section 80C. The section 80C has been further categorized into three parts: Market Linked saving schemes, Fixed Income saving schemes and Other expense related deductions.

• Market Linked: Equity Linked Savings Schemes (ELSS Funds of Mutual Fund) with lock-in of 3 years and Unit linked Insurance Plans (ULIP) with lock-in of 5 years.

(Also read: How to invest in Mutual Funds)

• Fixed Income: Public Provident Fund (PPF), Employees Provident Fund (EPF), Bank and Post office Time Deposit Schemes (Fixed Deposits) with a lock in of 5 years, Pension Funds, Nabard Rural Bonds, National Saving Certificates (NSC) 5 years, Kisan Vikas Patra, etc.
  
• Other deductions: Life Insurance Premium, Interest and Principal on Home loan and Children's Tuition Fees.

Tax-saving instruments available under 80CCF (Maximum limit: 20,000):
The Government has introduced another option this year, under the income tax clause 80CCF, in the form of infrastructure bonds where you can invest up to 20,000 and claim for deduction. Infrastructure bonds issued by both public sector or state owned companies as well as private sector companies would qualify for investment under this section.

Tax-saving instruments available under 80D (Maximum limit: Rs 30,000):
You can invest a sum up to Rs 30,000 under section 80D. You can claim a deduction for payment of Medical Insurance Premium i.e Contribution to Central Government Health Scheme. As per the provisions of the Act, you can claim Rs 15,000 for self, spouse and dependent children. You can also claim additional of Rs 15,000 for parents contribution.

Tax-saving instruments available under 80E:
You can also claim for your Education Loan for tax saving purpose as the the interest on the education loan is deductible under the clause 80E.

View: You should pick tax-saving instruments carefully depending upon your short-term and long-term requirement of funds. It's always appropriate to consult Investment Manager or Financial Planner before making any investment.

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