Government Schemes

ELSS vs PPF vs NPS Comparator

Compare India's top 3 tax-saving investments side by side. See projected corpus, tax savings, and effective returns for ELSS mutual funds, PPF, and NPS over your chosen period.

Investment Parameters

Section 80C limit: ₹1,50,000

Current govt rate: 7.1%

Min 40% must buy annuity at 60

ELSS (Equity Linked Savings)

Lock-in: 3 years

PPF (Public Provident Fund)

EEE Tax Free

NPS (National Pension System)

Extra ₹50K u/s 80CCD(1B)

Corpus Growth Comparison

Side-by-Side Comparison

Feature ELSS PPF NPS

Calculations are indicative. ELSS returns are market-linked and not guaranteed. PPF rate is revised quarterly by the government. NPS returns depend on asset allocation and fund manager performance.

ELSS vs PPF vs NPS — Which is Best for Tax Saving?

India offers three powerful tax-saving instruments under Section 80C of the Income Tax Act: ELSS mutual funds, the Public Provident Fund (PPF), and the National Pension System (NPS). Each serves a different investor profile and risk appetite.

ELSS is ideal for investors comfortable with equity market volatility who want the shortest lock-in period (3 years) and potentially highest returns (12-15% historically). It suits younger investors with a long time horizon who want wealth creation alongside tax savings.

PPF is the safest option with guaranteed returns and complete tax exemption (EEE status — Exempt at investment, Exempt on interest, Exempt at withdrawal). Best for conservative investors and those who want a risk-free, long-term savings vehicle with a 15-year lock-in.

NPS is designed specifically for retirement planning with the longest lock-in (till age 60). It offers an additional ₹50,000 deduction under Section 80CCD(1B), making the total tax benefit up to ₹2 lakh. However, at maturity, at least 40% must be used to purchase an annuity.

How to Use This Comparator

  1. 1

    Set your annual investment amount

    Enter how much you plan to invest per year (max ₹1,50,000 for Section 80C). The calculator assumes the same amount goes into each of the three options for a fair comparison.

  2. 2

    Choose your investment period

    Select 3-30 years. Note that PPF has a minimum 15-year lock-in and NPS locks till 60, but this calculator projects corpus for any chosen period to help you compare growth trajectories.

  3. 3

    Select your tax slab

    Your marginal tax rate determines the annual tax savings from 80C deductions. Higher slab = greater tax benefit from investing in these instruments.

  4. 4

    Adjust return rates and compare

    Fine-tune expected returns for each option. The results update in real time, showing net corpus after taxes, effective CAGR, and total tax savings for each instrument.

Key Differences at a Glance

ELSS — Equity Exposure

Shortest lock-in at just 3 years. Invested in equity mutual funds, giving highest potential returns (12-15% CAGR) but with market risk. LTCG above ₹1.25 lakh taxed at 12.5%.

PPF — Guaranteed Returns

Government-backed with zero risk. 15-year lock-in with partial withdrawal after year 7. EEE tax status means absolutely no tax on maturity. Rate currently 7.1% p.a.

NPS — Retirement Focus

Longest lock-in till age 60. Flexible allocation between equity, corporate bonds, and government securities. Extra ₹50K deduction under 80CCD(1B). 40% annuity mandatory.

Tax Rules for Each Investment

  • Section 80C Deduction — All three (ELSS, PPF, NPS) qualify for deduction up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. This applies under the old tax regime only.
  • Section 80CCD(1B) — NPS Extra Deduction — NPS subscribers get an additional ₹50,000 deduction over and above the ₹1.5 lakh 80C limit. This makes NPS the only instrument offering up to ₹2 lakh in total deductions.
  • ELSS — LTCG Tax — Long-term capital gains above ₹1.25 lakh in a financial year are taxed at 12.5% (no indexation). Gains up to ₹1.25 lakh are tax-free. Dividends are taxed at your slab rate.
  • PPF — EEE Status — PPF enjoys Exempt-Exempt-Exempt status: investment is deductible (80C), interest earned is tax-free, and maturity amount is completely tax-free. The gold standard for tax-free returns.
  • NPS — Partial EEE — At maturity, 60% of the corpus can be withdrawn as a tax-free lump sum. The remaining 40% (minimum) must be used to buy an annuity, and the annuity income is taxable at your slab rate as regular income.

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FAQs

Frequently asked questions

Which is better for tax saving — ELSS, PPF, or NPS?
It depends on your risk appetite and goals. ELSS: Best for wealth creation (12-14% historical returns) with shortest lock-in (3 years), but market risk. PPF: Best for risk-averse investors (7.1% guaranteed, 15-year lock-in, fully tax-free). NPS: Best for retirement planning (extra ₹50K deduction under 80CCD(1B)), but longest lock-in (till 60) and 40% must go to annuity.

How is ELSS taxed compared to PPF and NPS?
PPF is fully tax-free (EEE) — no tax on interest or maturity. ELSS gains above ₹1.25 lakh are taxed at 12.5% LTCG. NPS lump sum (60%) at maturity is tax-free, but the annuity portion (40%) is taxed as income at your slab rate. For someone in the 30% bracket, NPS annuity taxation can significantly reduce effective returns.

Can I invest in all three — ELSS, PPF, and NPS?
Yes, and many advisors recommend this approach. Invest ₹50K in ELSS (growth + short lock-in), ₹50K in PPF (safe + tax-free), and ₹50K in NPS (retirement + extra 80CCD(1B) deduction). This diversifies across risk levels and gives you an additional ₹50K deduction from NPS beyond the ₹1.5L 80C limit.

What is the lock-in period for each option?
ELSS: 3 years (shortest among 80C options). PPF: 15 years with partial withdrawal from year 7. NPS: Until age 60 (partial withdrawal allowed for specific purposes after 3 years). ELSS is ideal if you want flexibility, PPF for medium-term safety, and NPS for disciplined retirement savings.