Taxpayers can reduce their taxes legally by making investments under government-approved tax-free investment instruments. Mainly, the idea behind choosing the best tax-saving investment scheme is finding out which tax-saving avenues fit well with their larger financial goals and investing in them.

Choosing the best tax-saving scheme is a highly subjective matter and depends on various factors from person to person. The best tax-saving scheme for an individual would be one that offers them the flexibility of investments, withdrawals and asset location as per their risk appetite. Equity-Linked Investment Schemes, Tax Saver Fixed Deposits, Post Office Tax Saving Schemes and National Pension Schemes are some of the best tax-saving investment schemes available in India one can invest in.

The total amount of tax one can claim depends on the financial portfolio and profile of the taxpayer. One of the most common avenues that a taxpayer can use for tax savings is Section 80C, which allows them a deduction of up to INR 1.5 lakh in their taxable income. Similarly, other tax-saving avenues, such as interest on education loans, health insurance etc., can also provide deductions capped at a certain amount.

There is no limit on the number of tax-saving investment schemes that one can take benefit from. However, there is a limit to the deduction under which a taxpayer can claim the tax benefits. The limit to the deductions is according to different sections of the Income Tax Act 1961.

Other than Section 80C of the Income Tax Act 1961 tax paying schemes, there are various other deductions under Section 80 which taxpayers can use to save on income tax. Tax benefits on medical insurance, home loan interest, and interest paid on education loans are tax-saving schemes other than Section 80C of the Income Tax Act, to name a few.