Rs 1.5 Lakh Tax-Saving Investment: Final Corpus Projection After 15 Years
Major tax-saving investments, eligible for deductions under the overall Section 80C limit of Rs 1.5 lakh per annum, include PPF, ELSS, ULIP and NPS, among others.
Tax-saving investment instruments offer an opportunity to investors to accumulate wealth while reducing their overall income tax liability. Under Section 80C of the Income Tax Act, 1961, taxpayers can claim deductions up to Rs 1.5 lakh in a financial year.
Popular tax-saving investments in India include public provident fund (PPF), Equity Linked Savings Scheme (ELSS), Unit-Linked Insurance Plan (ULIP), National Pension System (NPS) and Employees' Provident Fund (EPF), among others. While all these investment options offer tax benefits, they vary widely in terms of features, tenure and returns.
These savings instruments come with different maturity tenures and provide varying returns, catering to both short-term investment goals and long-term financial planning.
Over a long-term tenure of 15 years, let’s see how your investments in PPF, ELSS and EPF can grow while offering tax benefits.
However, it’s important to note that Section 80C benefits can only be claimed under the old tax regime. The deductions against tax-saving investments can’t be claimed under the new tax regime.
PPF vs ELSS vs EPF: Expected Corpus After 15 years
Public Provident Fund (PPF)
The Employees' Provident Fund (PPF) is a government-backed long-term savings scheme. It comes with a 15-year lock-in period. It offers guaranteed returns and its gains are tax-free. The government decides the PPF interest rate for every quarter. Currently, the interest rate for the October-December 2025 quarter stands at 7.1% per annum.
Investment: Rs 1.5 lakh per year
Returns: 7.1% p.a.
Tenure: 15 years
Total Investment: Rs 22,50,000
Estimated Returns: Rs 18,18,209
Maturity Amount: Rs 40,68,209
Equity Linked Savings Scheme (ELSS)
Equity Linked Savings Scheme (ELSS) is a category of mutual funds that offers the dual benefit of long-term returns and tax deductions under Section 80C. Generally, ELSS plans come with a three-year lock-in period. Over a long-term horizon of 15 years, ELSS investments have typically generated average annual returns in the range of 12-14%.
Let’s see how an investment of Rs 1.5 lakh per annum in ELSS can grow at an assumed interest rate of 12% per annum over a 15-year tenure.
Investment Amount: Rs 12,500 per month (Rs 1.5 lakh per annum)
Investment duration: 15 years
Expected rate of return: 12%
Invested amount: Rs 22,50,000
Estimated returns: Rs 40,57,200
Total value: Rs 63,07,200
Employees' Provident Fund (EPF) Contributions
The Employees' Provident Fund scheme, managed by the Employees' Provident Fund Organisation (EPFO), is a retirement benefit scheme for salaried employees in the private sector. The interest rate for the EPF scheme is fixed by the government for each financial year. For FY 2024-25, the EFP interest rate has been fixed at 8.25%. Under the scheme, an employee contributes 12% of the basic pay and dearness allowance every month. An equal amount is also contributed by the employer.
The government-backed scheme offers salaried taxpayers the dual benefit of deductions under Section 80C and wealth accumulation. Taxpayers can claim deductions up to Rs 1.5 lakh in a financial year on the employee’s contributions to EPF under Section 80C.
Let’s see how a monthly contribution of Rs 12,500 to EPF (Rs 1.5 lakh per annum) can grow in 15 years.
Monthly investment amount: Rs 12,500
Investment duration: 15 years
Expected rate of return: 8.25%
Invested amount: Rs 22,50,000
Estimated returns: Rs 22,02,986
Total value: Rs 44,52,986
From the above calculations, it is clear that all three tax-saving instruments offer different returns over a 15-year period. The final corpus value can also vary significantly based on applicable income tax rates. laws. For instance, equity-linked returns are taxed at 12.5% for capital gains exceeding Rs 1.25 lakh in a financial year.
For best outcomes, a mix of these assets can provide tax savings and steady returns over a long-term horizon. However, it is always recommended to choose investment instruments carefully after a thorough evaluation of your financial needs and associated risks. It is advisable to seek the guidance of a certified financial planner for an effective investment strategy.
