It's the time of the year when most individuals engage in tax planning exercise to save income tax in India. Companies would now seek proof of investments on tax instruments, medical bills etc.

Here are some best tax saving instruments you could consider for this financial year which can help you in saving tax as well as provide you with better returns.

1. Public Provident Fund

This is one of the best options available under Sec 80C. Investing in this will benefit you from tax as well as it can act as retirement fund. PPF offers interest rate of 8.7 per cent per annum. The interest rate is changed every year by the government of India. A minimum deposit of Rs 500 must be made during one whole financial year. The maximum that could be deposited is Rs. 150,000 in a financial year. Click to know the list of banks offering PPF Account

2. ELSS Tax Savings Scheme

Equity linked savings scheme (ELSS), comes with a lock-in period of three years, because they provide you with Section 80C benefits. Equity Linked Savings Schemes invest most of the investor corpus in equities and are hence prone to how the stock markets perform. Click to know 7 best equity linked savings scheme in India.

3. Tax Saving Fixed Deposits

Tax saving bank fixed deposits are eligible for tax benefits under SEC 80C of the Income Tax Act. What this means is if you have taxable income and have invested in these deposits, you can deduct the sum from your taxable income, thus reducing your tax liability. Click to know facts on tax saving fixed deposits.

4. Senior Citizen Savings Scheme (SCSS)

Senior Citizen Savings Scheme (SCSS) is a safe instrument which provide assured returns. They are backed by government of India. Interest rate is offered at 9.2 per cent per annum. Click to know more about SCSS.

5. Rajiv Gandhi Equity Savings Scheme (RGESS)

Rajiv Gandhi Equity Savings Scheme or RGESS, enables the investor to earn returns of equity market and be eligible for tax benefits on the investments made under this Scheme. This is a scheme which give tax benefit for new investors who invest up to Rs 50,000 and whose annual income is below Rs 10 lakh. Click to know FAQs on RGESS.

Other investment where you can save tax are:

6. Insurance Plans

Life insurance products comes in different forms such as endowment plans, money back plans, term plans. The premiums paid on these policies are eligible for tax deductions under 80C. Individuals can avail maximum deductions up to Rs 1.5 lakhs. The maturity or bonus amount will be tax-free in the hands of the holder on maturity or death under Section 10 D.

7. NPS

The Pension Scheme has had a few changes this year. For instance one can get an additional tax benefit of Rs 50,000 if you park money in the scheme, which is now a part of Sec 80CCD.

The other benefit that one gets is that one can now invest in the scheme in equity as well. So, you can make a choice if you want to invest in equity or debt depending on your own risk profile, age etc.

8. ULIPs

Those who need insurance, which is to be bundled along with a tax saving instrument, Unit Linked Insurance Plans would be an ideal choice. They offer tax benefits under Sec 80C of the Income Tax Act. Returns are tempered because of the allocation of premium to various charges.

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