Every year, as March 31st approaches, millions of Indian investors scramble to save tax under Section 80C. The three most popular instruments are ELSS (Equity Linked Savings Scheme), PPF (Public Provident Fund), and NPS (National Pension System). But which one actually gives you the best deal? It depends — and this guide breaks it down clearly.
Equity Linked Savings Scheme
Mutual fund with 3-year lock-in. Invests in equity. Historical returns: 12–16% p.a. LTCG applies on gains above ₹1.25L.
Public Provident Fund
Government-backed. 15-year lock-in (partial withdrawal from year 7). Current interest: 7.1% p.a. EEE tax treatment — fully tax-free.
National Pension System
Market-linked. Lock-in until 60. Extra ₹50K deduction under 80CCD(1B). 40% must be used to buy annuity on retirement.
Head-to-Head Comparison
| Feature | ELSS | PPF | NPS |
|---|---|---|---|
| 80C Deduction Limit | ₹1.5L | ₹1.5L | ₹1.5L + extra ₹50K |
| Lock-in Period | 3 years | 15 years | Till age 60 |
| Expected Returns | 12–16% p.a. | 7.1% p.a. (fixed) | 8–12% p.a. |
| Risk Level | High (equity) | Zero (govt) | Medium |
| Tax on Returns | LTCG @ 12.5% above ₹1.25L | Fully tax-free (EEE) | Partial — 60% withdrawal tax-free |
| Liquidity | After 3 years | After 7 years (partial) | Limited till 60 |
💡 See how ₹1.5L/year in ELSS grows over 10–15 years using our Lumpsum calculator.
Try the calculator → 💬 Get a personalised planWho Should Choose What?
Choose ELSS if:
- You're under 45 and can tolerate market volatility
- You want the shortest lock-in (3 years) for flexibility
- You're in the 20–30% tax bracket — the tax saving + equity growth is unbeatable
Choose PPF if:
- You're risk-averse or near retirement
- You want 100% guaranteed, fully tax-free returns
- You can commit for 15 years
Use NPS additionally if:
- You've already maxed your ₹1.5L 80C limit
- You want to claim an extra ₹50,000 deduction under 80CCD(1B)
- You're building a disciplined retirement corpus with forced lock-in
₹1.5L in ELSS (via monthly SIP = ₹12,500/mo) + ₹50K in NPS (extra deduction) = ₹2L total tax saving per year. At 30% tax bracket, that's ₹60,000 saved in taxes annually.
*Returns shown are indicative. Past performance does not guarantee future results. Consult a registered advisor before investing.
If you (or your employer) has opted for the New Tax Regime (default since FY 2023-24), ELSS and PPF do not reduce your taxable income. Confirm with your HR or CA which regime you're on before investing for 80C savings.
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Disclaimer: Educational only. Tax laws can change. Consult a CA for personalised advice. Subhavani Nemalikanti is an AMFI Registered MF Distributor (ARN-358080). SampathaSetu is a financial planning portal, not a SEBI RIA.