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PPF vs ELSS vs NPS: which one, and when

All three are sold as tax savers, but they do different jobs: PPF is safe money, ELSS is equity, and NPS is retirement money you cannot touch till 60. Which tax regime you are in changes the answer more than anything else, so start there.

By 37xBetter · Last reviewed October 2026

Side by side

The table is a summary, and the details are below.

PPF: the safe part

PPF pays 7.1% for October to December 2026, and the interest and the maturity are both tax-free. You can put in up to ₹1.5 lakh a year, the account runs for 15 years and can be extended in blocks of five, and from the seventh financial year you can take out part of the balance. The trade-off is that the government resets the rate every quarter, so 7.1% is today's rate, and over 15 years it will not grow as fast as equity usually does. It suits the part of your money that must not fall.

ELSS: equity with a short lock-in

An ELSS fund is an equity mutual fund with a three-year lock-in, the shortest of any 80C option, and in a SIP each instalment is locked for its own three years. When you sell, gains above ₹1.25 lakh a year across all your equity are taxed at 12.5%. In the old regime it is the most direct way to get equity growth and the 80C deduction together. In the new regime there is no 80C, so an ELSS is just an equity fund with a lock-in, and an ordinary index fund does the same job with lower costs in many cases and no lock-in.

NPS: retirement money, locked till 60

NPS is the only one of the three built only for retirement. In the old regime your own contribution counts under 80C, and you can deduct another ₹50,000 under Section 80CCD(1B), which saves about ₹15,600 a year in the 30% slab after cess. In the new regime only your employer's contribution, up to 14% of basic plus DA, is deductible, under Section 80CCD(2). At 60, PFRDA's December 2025 rules let a non-government subscriber take up to 80% as a lump sum and buy a pension with the rest, though only 60% of the corpus is tax-free under current law, and the pension is taxed as income. The lock till 60 is the main cost, and it is also why NPS works: the money cannot be pulled out for a car or a wedding.

When each one wins

1. PPF wins for money you cannot afford to see fall, for anyone in the 30% slab who wants a tax-free safe return, and for a child's goal 15 years away.
2. ELSS wins in the old regime if you want equity and have not used up your 80C, because it is the only 80C option you can get out of in three years.
3. NPS wins if your employer contributes, in either regime, and for the extra ₹50,000 deduction in the old regime if you are sure you will not need the money before 60.

Most people in the old regime end up with a mix, and that is sensible. What I would avoid is choosing any of the three only for the deduction, because a tax break of a few thousand rupees does not make a product right for money you need in five years.