ELSS funds are useful for both immediate and long-term objectives. They also provide greater returns than NPS. These funds, in contrast to NPS, have a shorter lock-in period of three years, and investments are eligible for tax deductions under section 80C.
For long-term objectives like retirement planning, NPS may be more appropriate. They often deliver steady returns, in contrast to ELSS. Moreover, investments in NPS are eligible for tax deductions under Income Tax Act Sections 80C and 80CCD.
As a result, before choosing an investment, you should first determine your financial goals.
Finally, if you want to save taxes, you can choose from both NPS and ELSS. However, before taking such decisions, you must weigh your financial goals, risk tolerance, earnings and other factors. For instance, the tax deduction cap for NPS is larger than that for ELSS. On the other hand, ELSS offers a higher return due to its aggressive exposure to the equity market. Therefore, the overview of NPS vs. ELSS offers a clearer idea about what advantages and limitations each of these have for you.