You can save tax by proper planning.
Here are few suggestions :
Under 80C, instruments like PF, PPF(upto Rs. 70,000 only), LIC premiums, NSC, Child education tution fee, housing loan principal repaid (upto Rs. 20,000) etc. are eligible. Here, maximum limit is Rs. 1.0 Lakh for basket of instruments.
Under 80 F, you can get full waiver on tax by investing upto Rs. 20,000 in infrastructure bonds.
Take Housing Loan. Interest paid qualifies for tax waiver upto Rs. 1.5 L
Invest in markets for long term. Capital gain for equity transactions beyond 365 days is tax free.

Section 80C provides income tax payer up to a max of Rs. 1,00,000 tax free income per annum if they invest in or buy the following instrument:
Premium for Life Insurance or ULIP
Provident Fund (PF) contribution
Public Provident Fund (PPF) - only up to Rs. 70,000 in a year
Repayment of home loan principal
Equity Linked Savings Schemes (ELSS) of Mutual Fund Companies
Infrastructure Bonds
National Savings Certificates (NSC)
Tax Saving Fixed Deposits with Banks
Tuition Fees of children ...more

Source: http://www.probondins.com/

The best tax Saving instruments would be:
1. Life insurance Policy, where tax upto Rs 1 lakh can be saved under section 80C
2. Equity Linked savings Scheme, ELSS, where tax upto Rs 1 lakh can be saved under section 80C
3. Health Insurance, where tax upto Rs 15000 can be saved under section 80D
4. Public Provident Fund, where tax upto Rs 1 lakh can be saved under section 80C

Please log into the website to choose the best Life and Health Insurance policies

Thanks
Rupanjali M

Source: http://www.myinsuranceclub.com/

Life Insurance Policy
National Savings Certificate
PPF Account
VPF Account,
Infrastructure Bonds