Yes, certain Systematic Investment Plans (SIP), such as ELSS schemes can be used as tax saving instruments. SIP allows you to invest regularly on a fixed amount in a mutual fund scheme of your choice. This fixed amount will be deducted from your savings account every month and this money will be invested in your mutual fund. When it comes to saving on tax, you can consider Equity Linked Saving Schemes (ELSS). ELSS is a mutual fund equity scheme that comes with tax benefits and has a lock-in period of 3 years from the date of investment.

If you are planning to invest in ELSS mutual funds, you are eligible for a tax deduction of up to Rs. 1,50,000 under Section 80C of the Income Tax Act. The amount you are planning to invest can be deducted from your income before calculating taxes. The overall deduction that can be made is up to Rs. 1,50,000 on the investment. Investing in an equity scheme can be risky and depends on stocks. This scheme is ideal for long-term financial plans.