Tax planning is the art of arranging your affairs in ways that postpone or avoid taxes. By employing effective tax planning strategies, you can have more money to save and invest or more money to spend or both your choice.

Put another way, tax planning means deferring and flat out avoiding taxes by taking advantage of beneficial tax-law provisions, increasing and accelerating tax deductions and tax credits, and generally making maximum use of all applicable breaks available under our beloved Internal Revenue Code.

Financial planning is the art of implementing strategies that help you reach your financial goals, be they short-term or long-term. That sounds pretty simple. However, if the actual execution was simple, there would be a lot more rich folks.

Tax planning and financial planning are closely linked, because taxes are such a large expense item as you go through life. If you become really successful, taxes will probably be your single biggest expense over the long haul. So planning to reduce taxes is a critically important piece of the overall financial planning process.

Savings under section 80C can be broadly classified as investment based and non-investment based.

Provident Fund (PF), Public Provident Fund (PPF), Employees' Provident Fund (EPF), National Savings Certificates (NSC), National Pension System (NPS), Fixed deposit (FD) and Equity Linked Savings Scheme (ELSS)come are investment based savings; while principal repayment of home loan, tuition fee are non-investment based.

Before making investments related to tax saving it is always important that the individuals must analyse their risk appetite, and determine the percentage of debt and equity exposure they are comfortable with. Then they can match these percentages of debt and equity while investing in the available tax saving investments..

Since the risk appetite, liquidity needs and current portfolio of every individual are different, making investments based on just returns is not advisable.