As the financial year enters its last quarter, you would be drawing up your final investment plans for tax-saving purposes. You will have time till March 31, 2017, to make your tax-saving moves even if you have made your investment declaration to your employer, are waiting to do so or have missed the employer’s deadline and would have to seek refund for your investment from the Income Tax department.

The question that would bother most salaried taxpayers is which among the various options available under Section 80C of the I-T Act is the best-suited? What should be the criteria to choose the instruments to maximise benefits of the Rs 1.5 lakh investment allowed for tax deduction purposes in Section 80C?

“One should select the tax-saving instrument on the basis of financial need and tax efficiency. Taxpayers should also consider liquidity and diversification while selecting tax-saving instruments. Every investment has its own benefits,” says Sudhir Kaushik, co-founder and CFO, Taxspanner.com told Moneycontrol.

As an example, Kaushik points out a 5-year bank fixed deposit has longer lock-in period and interest is also taxable. Whereas ELSS offers 3-year lock in plus tax-free return. It also helps in diversification of assets portfolio. But it carries the market risk which might lead to lower returns.

Archit Gupta, Founder & CEO, ClearTax.com, agrees with Kaushik. “The type of tax-saving instrument one chooses should depend a lot on the risk profile, age and fund availability as well as income bracket of an individual. Section 80C offers a wide range of options to invest and save tax. Taxpayers should attempt to maximise it by claiming the entire Rs 1.5 Lakh deduction allowed,” Gupta said.

Gupta suggests those with higher risk profile can take advantage of the fall in the market to invest in Equity-Linked Savings Schemes (ELSS) while the conservative investor can opt for Public Provident Fund (PPF) or National Savings Certificate (NSC).

“Products like PPF and NSC offer low returns but come with low risk. Those with a conservative risk profile should invest in these instruments. Those who have appetite for risk, should choose ELSS funds. Especially at this time of the year, when the market looks attractive. Investors can also spread their total ELSS investment by doing a SIP over the coming three months till March,” Gupta said.

If you have our own home for which loan repayments are paid and are facing a cash crunch, you can claim the principal portion of their EMIs under section 80C. Employee’s contribution to EPF can also claimed under section 80C.

Those in the higher tax bracket, can save an additional Rs 50,000 (over Rs 1.5 lakhs under section 80C) by investing in the National Pension System (NPS) under section 80CCD(1B).

Gupta, however, advises against investing in life insurance purely for tax saving. “If you purchase life insurance, its can be claimed as well. However, you should purchase an insurance policy according to your financial goals and after weighing its pros and cons and do not pay premium only to save tax.”