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Tax Planning

PPF vs NPS vs ELSS: Where Should Your 80C Money Go?

Updated 20 August 2026

Section 80C gives you a ₹1.5 lakh deduction (old regime only), and PPF, NPS, and ELSS are three of the most common ways to use it — but they behave very differently.

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PPF is the safest of the three: a government-guaranteed, tax-free return currently around 7.1%, with a 15-year lock-in. It suits money you genuinely won't need for a long time and want zero market risk on.

ELSS (Equity Linked Savings Scheme) is a mutual fund with the shortest lock-in of any 80C option — just 3 years — and full equity market exposure, so it has historically offered the highest long-term growth potential of the three, along with the most volatility.

NPS sits in between, with market-linked equity and debt exposure similar to ELSS but locked in until retirement, and it comes with an extra ₹50,000 deduction under Section 80CCD(1B), over and above the ₹1.5 lakh 80C limit — effectively a bonus tax break unique to NPS.

A common approach: use ELSS for the growth-oriented portion of your 80C since the lock-in is short and manageable, keep some PPF for a guaranteed floor, and add NPS specifically to capture that extra ₹50,000 deduction rather than as your primary retirement vehicle, since its mandatory annuitisation at retirement reduces flexibility later. The PPF and NPS calculators on this site can help you compare actual projected corpus values side by side.

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Frequently asked questions

What is the Public Provident Fund (PPF)?

PPF is a long-term government savings scheme offering a fixed, government-declared interest rate, full tax exemption on contributions, interest, and maturity proceeds, and a mandatory 15-year lock-in, making it one of India's most trusted retirement and long-term savings instruments.

Who can open a PPF account?

Any resident Indian individual can open a PPF account, including on behalf of a minor child; NRIs cannot open new PPF accounts, though existing accounts opened while they were residents can be continued until maturity without further contributions in some cases.

What is the minimum and maximum PPF contribution?

You must deposit at least ₹500 in a financial year to keep the account active, and can contribute up to a maximum of ₹1.5 lakh per financial year, in up to 12 instalments across the year.