The best investment option for tax savings depends on an individual's financial goals, investment horizon, and risk tolerance. Here's a brief overview of each option to help you make an informed decision:

National Pension System (NPS)

NPS is a retirement savings scheme that allows individuals to invest a portion of their income for their post-retirement life. The money invested in NPS grows over time, and upon retirement, a portion of the corpus can be withdrawn as a lump sum, while the rest can be used to purchase an annuity plan that provides a regular income. NPS has two investment options - Equity and Debt. The equity option invests in equities and is suitable for individuals who have a long-term investment horizon and a higher risk tolerance. The debt option invests in fixed-income instruments and is suitable for individuals who have a lower risk tolerance. NPS offers tax benefits under Section 80CCD (1B) of the Income Tax Act, 1961, which allows an additional deduction of up to INR 50,000 for investment in NPS.

Equity-Linked Savings Scheme (ELSS)

ELSS is a type of mutual fund that invests primarily in equities. The primary aim of ELSS is to generate long-term capital appreciation for investors. As ELSS invests in equities, it is considered a high-risk investment option. However, it also has the potential to generate higher returns compared to other investment options. ELSS has a minimum lock-in period of 3 years, which means that the invested amount cannot be redeemed before the completion of 3 years. ELSS offers tax benefits under Section 80C of the Income Tax Act, 1961, which allows a deduction of up to INR 1.5 lakh for investment in ELSS.

Public Provident Fund (PPF)

PPF is a long-term savings scheme offered by the Government of India. The primary aim of PPF is to provide a safe and secure investment option for individuals. PPF has a minimum lock-in period of 15 years, and the invested amount earns a fixed rate of interest, which is determined by the government. The interest earned on PPF is tax-free, and the invested amount is eligible for tax benefits under Section 80C of the Income Tax Act, 1961. PPF is considered a low-risk investment option, making it suitable for individuals who are looking for a safe and secure investment option for their long-term goals.

In inShot, NPS, ELSS and PPF are all best of choices to start saving, but the only difference is in the result you expect out of it like NPS is best for those who are looking for retirement savings, ELSS is best for those who are looking for a combination of tax savings and capital appreciation, and PPF is best for those who are looking for a safe and long-term investment option for tax savings. It's important to keep in mind that each individual's financial situation is unique, and the best investment option for tax savings may vary based on their financial goals, investment horizon, and risk tolerance.

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