If you are planning to move to the new income tax regime — or have already made the switch — it may be time to reassess your investment strategy. One of the most common questions taxpayers face is whether they should continue investing in Public Provident Fund (PPF) and Equity Linked Savings Scheme (ELSS) after shifting from the old tax regime.

Under the old tax regime, several investment instruments qualified for deductions under Section 80C of the Income Tax Act, 1961. However, these deductions are not available in the new regime. This key difference has made many individual taxpayers reconsider how and where they invest their money.

With lower tax rates and a simplified structure, the new tax regime has gained popularity in recent years. But does that mean tax-saving investments like PPF and ELSS lose their relevance? Let’s break it down.

Tax Benefits Under Section 80C: What Changes in the New Regime?

Both PPF and ELSS fall under Section 80C, which allows deductions of up to ₹1.5 lakh per financial year under the old regime. Taxpayers opting for the new regime cannot claim these deductions.

According to financial experts, if your primary reason for investing in PPF or ELSS was to save tax under Section 80C, you may need to rethink your approach. However, taxation is only one aspect of investing. Long-term wealth creation and financial goal planning are equally important considerations.

Public Provident Fund (PPF): Safety and Tax-Free Growth

Public Provident Fund (PPF) has long been considered one of the safest long-term investment options. Backed by the government, it offers stable returns and carries sovereign guarantee, making it virtually risk-free.

One of the biggest advantages of PPF is its EEE (Exempt-Exempt-Exempt) status:

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  Investment qualifies for deduction (under old regime only)

  
  


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  Interest earned is tax-free

  
  


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  Maturity amount is completely tax-free

  
  

Even under the new tax regime, while fresh contributions do not qualify for Section 80C deductions, the interest earned and maturity proceeds remain tax-free.

With a maturity period of 15 years and the benefit of compounding, PPF can help build a substantial retirement corpus. Investors can contribute up to ₹1.5 lakh annually. For those focused on long-term capital preservation and disciplined savings, PPF continues to remain attractive, even without tax deductions.

Equity Linked Savings Scheme (ELSS): Tax Saving with Market-Linked Growth

ELSS is a diversified equity mutual fund with a three-year lock-in period — the shortest among all Section 80C options. It primarily invests in equity markets, offering the potential for higher returns compared to fixed-income instruments.

Although new regime taxpayers cannot claim tax deductions on ELSS investments, the product itself still holds strong long-term growth potential.

Key features of ELSS:

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  Three-year lock-in period

  
  


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  Market-linked returns

  
  


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  Potential for wealth creation through equity exposure

  
  


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  Long-term capital gains (LTCG) tax exemption up to ₹1.25 lakh per financial year

  
  

Over recent years, large-cap and mid-cap funds have delivered competitive returns, and ELSS funds have also shown solid long-term performance. For investors with a long investment horizon and moderate to high risk appetite, ELSS can remain a valuable part of a diversified portfolio.

Should You Continue Investing After Switching to the New Regime?

The answer depends on your financial goals — not just tax savings.

If your investment decisions were driven solely by Section 80C deductions, you may consider reallocating funds to other instruments that align better with your long-term strategy under the new tax framework.

However, if your objective is:

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  Building a retirement corpus

  
  


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  Long-term wealth accumulation

  
  


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  Diversifying between debt and equity

  
  


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  Benefiting from compounding over time

  
  

Then both PPF and ELSS still deserve consideration.

Why PPF Still Makes Sense

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  Tax-free maturity

  
  


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  Guaranteed returns

  
  


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  Ideal for conservative investors

  
  

Why ELSS Still Holds Value

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  Equity exposure for higher growth potential

  
  


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  Shortest lock-in among tax-saving instruments

  
  


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  LTCG tax benefit

  
  

The Bottom Line

Switching to the new tax regime does remove the immediate tax deduction benefit under Section 80C. However, it does not make PPF and ELSS irrelevant.

Investing should always be aligned with your long-term financial plan rather than short-term tax savings alone. PPF offers stability and tax-free compounding, while ELSS provides market-linked growth potential.

Before making any changes, evaluate your risk profile, financial goals, and overall tax liability. A balanced approach — combining disciplined savings and strategic investing — can help you stay on track regardless of the tax regime you choose.