The ₹1.5 Lakh Question
Every taxpayer under the old regime has ₹1.5 lakh to invest under Section 80C. Where you put this money can dramatically affect both your tax savings and long-term wealth. PPF, ELSS, and NPS are the three most popular options — here's how they compare.
Quick Comparison Table
| Feature | PPF | ELSS | NPS |
|---|---|---|---|
| Returns | 7.1% (fixed) | 12-15% (market) | 9-11% (market) |
| Lock-in | 15 years | 3 years | Till retirement |
| Tax on returns | Nil (EEE) | 10% LTCG | Partially taxable |
| Risk | Zero | High | Medium |
| Extra tax benefit | No | No | ₹50K extra under 80CCD |
When to Choose PPF
PPF is perfect for risk-averse investors who want guaranteed, tax-free returns. The EEE (Exempt-Exempt-Exempt) status means you get a tax deduction on investment, tax-free interest, and tax-free maturity. However, the 15-year lock-in makes it illiquid. Best for long-term goals like retirement or children's education.
When to Choose ELSS
ELSS (Equity Linked Savings Scheme) is the best choice if you want the highest potential returns and the shortest lock-in (only 3 years vs 15 for PPF). Returns are market-linked and historically much higher than PPF, but they come with equity market risk. Best for younger investors with a high risk tolerance and long investment horizon.
When to Choose NPS
NPS is ideal if you're specifically planning for retirement. It offers an additional ₹50,000 deduction under 80CCD(1B) — over and above the ₹1.5 lakh 80C limit. This makes total potential deduction ₹2 lakh. However, you can only withdraw the full amount at 60, and 40% must be used to buy an annuity.
The Optimal 80C Strategy
For most salaried Indians under 45: Split between ELSS (₹75,000) and PPF (₹75,000). Add NPS (₹50,000 under 80CCD) for extra tax savings. This gives you market-linked growth, capital safety, and maximum tax deduction all at once.
