Tax planning is a process of analysing one's financial situation logically with a view to reducing tax liability. Tax planning involves planning your income in a legal manner so to avail various exemptions and deductions. Under Section 80C, you can avail tax deduction if specific investments are made for a specific period up to a limit of 1, 50,000. The most popular methods for saving tax are investing in Mutual Funds (ELSS), NPS, Insurance, National Saving Certificate, Fixed Deposit,and Provident Funds. Tax planning involves applying various advantageous provisions which are legal and entitles the assesse to avail the benefit of deductions, credits, concessions, rebates and exemptions. Or we can say that, Tax planning is an art in which there is a logical planning of one's financial affairs in such a manner that benefits the assesse with all the eligible provisions of the taxation law. Tax planning is an honest approach of applying the provisions which comes within the framework of taxation law.