I earn 5 lac. rupees per year .tell me best investment option for tax benifit which give me good return?

You should go for Life Insurance policies.

Try out Bajaj Allianz or Birla Sun Life; Insurance can offer upto 100% tax dedcution of upto Rs. 1 lacs and provide bright opportunitues on equity linked funds ( ULIP ).

Contact: anneshan04@yahoo.com for more, from my insurance agent.

How much is that in American money?

NSC certificates or Indira Gandhi Vikas patra. Small investments,but big returns.Also,you can be assured of security.

Plan 1rs 50,000 each year in HDFC tax saver and rs 50,000 in Birla Tax Plam 98
( mutual funds with 80 c benefits. ) the maximum allowed is rs 1 lakh only.
Plan 2
rs 70,000 in PPF ( post office )
rs 30,000 in Hdfc tax saver.

home loan is the best ... if it is suitable for you.
else NSC/PPF are reliable options too.

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You can save upto Rs.1,00,000 under section 80c to save tax.
you can try others too like home loan principal, charity u/s 80g, and medical policy etc.,
u/s 80c you can save through LIC policies, 5 year Fixed deposits, PPF, EPF,ELSS funds etc.

good luck
pnkmurthy@yahoo.com
http://www.geocities.com/pnkmurthy/lic.h...

if u don't have a home purchase it .u would get exemption 1.5 lacs

or u will have to invest in the schemes where there r tax benefits......... like sip, Tax saving mutual funds, Life insurance, NSC, fixed deposits,