As the financial year draws to a close, taxpayers in India scramble to maximise their tax-saving investments. Three of the most popular options — National Pension System (NPS), Public Provident Fund (PPF) and Employees’ Provident Fund (EPF) — offer tax benefits while helping investors secure their financial future.

But where should you invest more before the deadline?

National Pension System (NPS)

The National Pension System (NPS) is a government-backed retirement savings scheme designed to provide financial security during one’s post-working years. It allows individuals to contribute regularly throughout their careers, helping them build a substantial retirement corpus over time. Upon retirement, NPS offers a mix of lump sum withdrawals and regular income, ensuring long-term financial stability. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), making it a reliable option for retirement planning. Current NPS interest rates for 2025 range between 9% and 12% p.a.

NPS Tax Benefits

NPS offers significant tax advantages for both salaried and self-employed individuals.

Salaried Individuals:

  • You can claim a tax deduction of up to Rs 50,000 under Section 80CCD (1B), over and above the Rs 1.50 lakh limit under Section 80C.

  • Employer contributions towards NPS is eligible for tax benefits, with an overall cap of Rs 7.5 lakh per financial year.

Self-Employed Individuals

  • You can invest up to 20% of your gross annual income and claim a tax exemption under Section 80CCD (1), subject to the Rs 1.50 lakh limit under Section 80C.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a government-backed savings scheme in India that provides secure, tax-free returns while enabling long-term wealth accumulation. It is a popular investment choice due to its blend of safety, steady returns, and tax benefits under Section 80C of the Income Tax Act, 1961.

Investors can contribute a minimum of Rs 500 and a maximum of Rs 1.50 lakh in a financial year. PPF has a tenure of 15 years, with an option to extend it in blocks of five years. A minimum annual deposit of Rs 500 is mandatory to keep the account active. The prevailing PPF interest rate is 7.1% per annum.

Tax Benefits

Investing in a Public Provident Fund (PPF) provides significant tax advantages.

  • Investments up to Rs 1.50 lakh per financial year qualify for tax deductions under Section 80C of the Income Tax Act.

  • The interest earned on PPF investments is completely exempt from income tax.

  • The entire amount received at maturity, including the principal and accumulated interest, is tax-free.

Employees’ Provident Fund (EPF)

The Employees’ Provident Fund (EPF) is a popular retirement savings plan, which also offers tax benefits. It’s mandatory for salaried individuals employed in companies with a workforce of 20 or more.

Tax Benefits

  • Employees contribute 12% of their basic salary and dearness allowance to EPF, which qualifies for a Section 80C deduction of up to Rs 1.5 lakh per financial year.

  • Employers also contribute 12% of the employee’s basic salary and dearness allowance, but only up to Rs 7.5 lakh per year (including EPF, NPS, and Superannuation Fund) is tax-free.

  • Interest earned on EPF is tax-free up to 9.5%, while any excess interest is added to the employee’s taxable income.

Where Should You Invest More?

If you have a high-risk appetite and want to maximise tax savings, NPS offers the best benefits, especially with the additional Rs 50,000 deduction.

If you prefer guaranteed returns with full tax exemptions, PPF is the safest bet.

If you are a salaried individual, EPF is already a part of your savings, but making voluntary contributions (VPF) can further increase your retirement corpus.

Ultimately, a balanced approach — investing across all three based on your risk tolerance and financial goals — is the best strategy before the financial year ends.

. Read more on Personal Finance by NDTV Profit.With tax-saving benefits and long-term security, NPS, PPF and EPF are among the best investment choices.  Read MorePersonal Finance 

​NDTV Profit