Tax Saving Investment Comparison — ELSS vs PPF vs FD vs NSC vs NPS
All section 80C investments give the same deduction, but they behave very differently afterwards: some are locked for three years and some for fifteen, some pay guaranteed interest and some track the stock market, and some are taxed at maturity while others are completely exempt. This tool projects the corpus of each option for your amount and holding period, deducts the tax payable at maturity under current rules, adds back the tax saved through the deduction (old regime), and ranks them by net value.
How each option is taxed
- ELSS — 3-year lock-in; gains are LTCG taxed at 12.5% above ₹1.25 lakh per year; returns are market-linked (12% assumed by default).
- PPF — 15-year tenure; interest (7.1% currently) and maturity are fully exempt (EEE); maximum ₹1.5 lakh per year.
- Tax-saver FD — 5-year lock-in; interest taxed every year at your slab; TDS u/s 194A.
- NSC — 5 years; interest is reinvested and qualifies for 80C, but is taxable at slab.
- NPS Tier-I — locked until 60; extra ₹50,000 u/s 80CCD(1B); 60% of corpus tax-free, 40% must buy an annuity whose pension is taxable.
- SCSS — for those aged 60+; 5 years; 8.2% paid quarterly and taxable (80TTB relief up to ₹50,000).
Formula
Corpus for yearly investment = P × [((1 + r)n − 1) ÷ r] × (1 + r). Net value = corpus − tax on maturity + tax saved via deduction. Effective CAGR is derived from the net value over the average holding period.
Worked example
₹1,50,000 invested every year for 15 years by a 30% slab taxpayer in the old regime. PPF at 7.1% grows to about ₹40.7 lakh, fully tax-free, plus ₹7 lakh of 80C tax saved over the years. ELSS at 12% grows to about ₹62.6 lakh; after 12.5% LTCG on gains above ₹1.25 lakh the tax is roughly ₹5.1 lakh, leaving ₹57.5 lakh plus the same ₹7 lakh of deduction benefit. A tax-saver FD at 6.5% reaches ₹38.6 lakh but loses about ₹5 lakh to slab tax, ending well behind. The chart makes the gap visible at a glance.
Choosing wisely
- Short horizon (3–5 years) with safety: tax-saver FD or NSC, accepting the tax drag.
- Medium to long horizon with zero risk: PPF or SSY (for a daughter).
- Long horizon and comfort with volatility: ELSS, ideally via monthly SIP.
- Retirement focus: NPS for the extra ₹50,000 deduction and low cost.
If you are in the new regime the 80C saving disappears — untick the old-regime box to compare on pure post-tax returns.
Frequently Asked Questions
Is ELSS better than PPF?
Historically ELSS has delivered higher returns because it invests in equities, and its lock-in is only three years, but returns are not guaranteed and gains above ₹1.25 lakh are taxed at 12.5%. PPF is risk-free and fully tax-exempt but locked for 15 years. Many investors hold both.
Is interest on a tax-saver FD tax free?
No. Only the principal qualifies for 80C; the interest is fully taxable at your slab every year and banks deduct TDS if it exceeds ₹50,000 (₹1 lakh for senior citizens).
How is NPS taxed at maturity?
At 60 you can withdraw up to 60% of the corpus tax-free. The remaining 40% must be used to buy an annuity, and the pension received from it is taxable as income each year.
Do these deductions work in the new regime?
No. 80C and 80CCD(1B) are not available in the new regime, so the comparison should be made on post-tax returns alone. Employer NPS contribution u/s 80CCD(2) remains deductible in both regimes.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.