PPF vs ELSS vs NPS for tax saving

For tax saving in FY 2026-27, start with the regime, not the product. If you stay in section 202, the new regime, your own PPF, your own ELSS and your own NPS do not reduce your tax. Section 202 drops section 123, which was section 80C, and it drops section 124(3), which was section 80CCD(1B). The only NPS that still cuts tax inside section 202 is the amount your employer pays, under section 124(1) and 124(2).

If you leave section 202, all three can sit in the old regime. They are not three caps. PPF, ELSS and the ordinary NPS contribution share one basket of ₹1,50,000. NPS alone has a second line of ₹50,000. After that, the products diverge: a notified small-savings rate, a market return with a short lock, and a pension account you cannot treat as a savings account.

The old versus new guide shows when the old regime is cheaper. The section 123 list is the whole basket, not just these three. This page is the comparison.

What each one is

PPF is the Public Provident Fund under the PPF Scheme, 2019. You may deposit from ₹500 to ₹1,50,000 in a year, in multiples of ₹50. The rate for 1 October 2026 to 31 December 2026 is 7.1% a year. Interest uses the lowest balance between the close of the 5th and the end of the month, and it is credited on 31 March. The account matures 15 years from the end of the year you opened it. That is 16 deposits if you pay every year including the first. You can extend it in blocks of 5 years. The PPF calculator uses those rules.

ELSS is an equity linked savings scheme. SEBI’s investor note describes it as a diversified equity fund with at least 80% in equity and equity-related instruments, and a lock-in of 3 years. The lock is statutory. It runs from the date each unit is allotted, so a SIP locks each instalment separately. The scheme people file with SEBI cites the Equity Linked Savings Scheme, 2005. The tax hook is Schedule XV, paragraph 1(m), inside section 123. The return is not notified. It is the market. The SIP calculator can project a monthly ELSS at a rate you type. It does not know which fund you bought.

NPS is the National Pension System. Your money is invested until you exit. At a non-government exit at 60, at least 20% of the corpus buys an annuity and up to 80% can be a lump sum, with simpler cash options when the corpus is ₹8,00,000 or below, and a mid band up to ₹12,00,000. The NPS calculator models the annuity choice. It does not model the six-year redemption some mid-sized accounts can use instead. The return you type is a planning rate. PFRDA does not notify one the way the Finance Ministry notifies PPF.

Tax on the way in

In the old regime the deposit or the investment can be deducted. The rules are not the same width.

PPF is section 123 read with Schedule XV, paragraph 1(e). That was section 80C. It shares ₹1,50,000.

ELSS is the same section, Schedule XV, paragraph 1(m). Same cap. A fund that is not an ELSS does not get this deduction, however equity-like it looks.

Your own NPS inside the cap is Section 123 read with Schedule XV, paragraph 1(y). That was Section 80CCD(1). For an employee the Act limits this piece to 10% of salary. For anyone else it is 20% of gross total income. Either way it shares the section 123 cap. It is not a second ₹1,50,000.

The further ₹50,000 is Section 124(3), which was Section 80CCD(1B). Section 124(5) refuses a deduction here for an amount already allowed under section 123. You allocate the contribution. You do not count it twice.

Employer NPS is Section 124, which was Section 80CCD(2). Section 202 keeps it. On the calculator the new-regime rate is 14% of salary. A private employer in the old regime is 10%. Government stays at 14%.

Take a resident under 60 with salary of ₹20,00,000 and no other deduction. The standard deduction is still in the engine.

Table: Tax at ₹20,00,000 of salary

The shared cap cuts the old-regime bill by ₹46,800. The extra NPS line cuts it by a further ₹15,600. The new-regime tax is ₹1,92,400 on every row. PPF does not beat ELSS on tax per rupee inside the cap. They are the same deduction. NPS wins on tax only because of the extra ₹50,000, and only in the old regime.

FY 2025-26 still calls these 80C and 80CCD on the form. The Act of 2025 applies from 1 April 2026. Do not print 123 on a return for the earlier year. The ITR guide is that filing season.

Tax on the way out

The deduction is the smaller half of the story. The exit decides what you actually keep.

PPF maturity proceeds are dealt with under Schedule II, which was Section 10(11). The calculator does not subtract tax at maturity. That matches the way the page is built. It is not a promise about a future amendment.

ELSS is an equity fund. After the lock-in you can sell. The gain is taxed. Held more than 12 months, which a unit past the 3-year lock will be, it is section 198: 12.5% above ₹1,25,000 of long-term equity gain in the year, plus 4% cess. The SIP engine on the example below already applies that, including short-term tax on the newest units if you sell the whole account on one day. A three-year lock does not make the gain exempt. The SIP versus lump sum guide shows the same tax on a general equity SIP.

NPS is taxed in layers. Schedule II, which was Section 10(12A), leaves out a lump sum only up to 60% of the corpus. An 80% lump sum does not make the extra 20% exempt. Buying the annuity is not itself treated as received that year. The pension is taxed when it is paid, at your slab. The calculator shows the tax-free lump sum and the taxable remainder. It does not guess your slab in the year you turn 60.

Three projections that are not a race

The rates are different kinds of number. PPF uses the notified 7.1% for this quarter, and the scheme’s own interest rule. ELSS uses the site’s equity planning rate of 12%, which is not a fund’s past return and not a promise. NPS uses the calculator’s planning return of 10% and a planning annuity rate of 6%. Comparing the ending rupees as if they were the same product is how advertisements cheat. They are here so you can see the shape of each engine, on ₹1,50,000 a year of your own money.

The PPF run deposits ₹1,50,000 by 5 April each year, with no extension. The engine makes 16 contributions, because the opening year counts. You put in ₹24,00,000. Interest credited is ₹21,17,701. The maturity value is ₹45,17,701.

The ELSS run is ₹12,500 a month for 15 years at 12%, with no step-up. You invest ₹22,50,000. The ending value before tax is ₹63,07,200. Tax if you sell the lot in one year is ₹5,11,974, of which the exemption used is ₹1,25,000. The value after that tax is ₹57,95,226. The 12% is an assumption. A lower rate can finish behind PPF. A bad stretch can finish behind the cash you put in. The calculator will show that if you type the lower rate. This page will not pretend 12% is owed to you.

The NPS run is the same ₹12,500 a month, from age 45 to 60, so the contribution period is 15 years, close to the ELSS period and shorter than the PPF deposit count. The planning return is 10%. You put in ₹22,50,000. The corpus is ₹52,24,053. At the calculator’s default annuity share of 40%, the lump sum is ₹31,34,432, of which ₹31,34,432 is inside the 60% exemption and ₹0 is not. The annuity purchase is ₹20,89,621. The planning pension is ₹10,448 a month, before tax on the pension. An insurer’s quote will not match 6% just because the box starts there.

Table: Your own ₹1,50,000 a year, three different engines

Do not subtract these and declare a winner. The years are not identical. The PPF rate can be re-notified next quarter. The equity rate is a guess. The NPS rate is a different guess. A person who needs the money at 40 cannot use the NPS column. A person who cannot watch a market fall cannot use the ELSS column just because the tax line is the same.

When you can touch the money

PPF is built to stay put. Partial access exists under the scheme, on the conditions in the scheme, not as a debit card. The maturity is the 15-year rule above. Extension is a choice at the end, in blocks of five years.

ELSS is the short lock. 3 years from each allotment. After that you may redeem or keep the units. You may not pledge or transfer them during the lock, which is the point of the scheme SEBI describes. A SIP started this month still has its last instalment locked three years after that last instalment. “Three years” is not three years from the first date if you kept paying.

NPS is the long lock. The normal non-government exit the calculator models is at 60. A premature exit, which this calculator does not run, needs at least 80% in an annuity, or the whole corpus in cash if it is ₹5,00,000 or less. Do not put next year’s school fees here and expect a clean withdrawal.

How to choose without buying a pitch

If you are staying in the new regime, do not buy any of these for a deduction on your own contribution. The deduction is not there. Buy PPF if you want the small-savings account. Buy an equity fund, ELSS or not, if you want shares and can leave them. Join NPS if you want the pension rules, or if your employer is paying in and that deduction is real.

If you are leaving the new regime, fill section 123 with the product that matches the year you need the money. Use the extra NPS line only if you can leave that ₹50,000 until the exit rules allow it. Do not split ₹1,50,000 across three products just to hold all three. One product that fits is enough. The tax math does not pay you for holding a set.

Run the PPF calculator at 7.1% and then at a rate you think the Ministry might notify later. Run the SIP calculator at a rate below 12% as well as at 12%. Run the NPS calculator with and without the employer amount. Then put the deduction you can actually claim into the income tax calculator. If the new regime is still cheaper, the deduction was not the point.