Best Tax Saving Investment Under ₹1.5 Lakh — India Post Options Explained (2025)
Updated: October 25, 2025 · Read time: 7 minutes
If you’ve ₹1.5 lakh to allocate for tax savings, India Post offers safe, high-trust options: NSC (5-yr, 7.7% — good for 80C), PPF (long-term, tax-free interest), SSY (for girl child, tax-free), SCSS (if eligible — seniors), and Postal Life Insurance (PLI/RPLI) (premium qualifies for 80C). Combine them smartly to maximize tax benefit + liquidity. Always confirm latest rates at India Post.
Saving tax under Section 80C is the easiest legal way to reduce your taxable income. The total claimed deduction under Section 80C is capped at ₹1.5 lakh per financial year. If you prefer government-backed, low-risk instruments, India Post offers several options that fall under 80C or help you achieve the benefit indirectly. This article explains each option, tax treatment, who should use it, and sample allocation strategies for ₹1.5 lakh.
Quick comparison — India Post tax-saving options under ₹1.5L
| Scheme | 80C Eligible? | Lock-in / Tenure | Tax on interest | Who it’s best for |
|---|---|---|---|---|
| National Savings Certificate (NSC) | Yes (80C) | 5 years | Interest taxable (but reinvested interest gets 80C benefit) | Short-mid term 80C savers |
| Public Provident Fund (PPF) — via Post Office | Yes (80C) | 15 years (extendable) | Interest tax-free (EEE) | Long-term savers / retirement |
| Sukanya Samriddhi Yojana (SSY) | Yes (80C) | Until child turns 21 (min 15 yrs) / maturity | Interest tax-free | Parents of girl child seeking tax-free returns |
| Senior Citizen Savings Scheme (SCSS) | Yes (80C) — if eligible | 5 years (extendable) | Interest taxable | Seniors (60+), retirees |
| Postal Life Insurance (PLI / RPLI) premiums | Yes — insurance premium qualifies under 80C | Policy term varies | Maturity proceeds may be tax-free under 10(10D) (if conditions met) | Those seeking life cover + tax cushion |
Notes: Rates & rules are government-controlled and reviewed quarterly. PPF and SSY provide tax-free interest; NSC and SCSS interest is taxable but contributions can be used for 80C. Confirm details at your nearest post office.
1) National Savings Certificate (NSC) — Best if you want a 5-year 80C pick
Why choose NSC? NSC is a simple 5-year fixed income product with government backing and 80C eligibility. The government-notified rate for 2025 is 7.7% p.a. (check quarterly notifications). NSC is ideal if you want to use part of your ₹1.5 lakh 80C limit in a safe, guaranteed instrument.
- Lock-in: 5 years
- 80C: Principal qualifies up to ₹1.5 lakh
- Tax: Interest is taxable on accrual but reinvested interest counts toward 80C (practical effect: you get 80C benefit as you reinvest interest each year)
- How to buy: Visit a post office — minimum deposit starts small (check local counter). Online options available via designated banks/post office portals in some areas.
2) Public Provident Fund (PPF via Post Office) — Best for long-term tax-free growth
Why choose PPF? PPF gives EEE status (Exempt-Exempt-Exempt): contributions qualify for 80C, interest is tax-free, and maturity is tax-free — making it extremely tax-efficient if you’re saving for retirement or long-term goals. PPF tenure is 15 years (extendable). Many investors park a portion of ₹1.5 lakh in PPF for tax efficiency and safety.
- Lock-in: 15 years (partial withdrawals allowed after year 5)
- 80C: Annual contributions up to ₹1.5 lakh
- Tax: Interest & maturity are tax-free
- How to buy: Open a PPF account at a post office (or bank). Contribute up to ₹1.5 lakh/year across PPF + other 80C instruments.
3) Sukanya Samriddhi Yojana (SSY) — Best for parents planning for daughter’s future (tax-free)
Why choose SSY? SSY offers attractive tax-free interest and principal deduction under 80C. It’s aimed at girl child savings and gives better effective returns for disciplined long-term savings. If you have a girl child, SSY is an excellent tax-efficient place to allocate part of your ₹1.5 lakh.
4) Senior Citizen Savings Scheme (SCSS) — For seniors who want both income + 80C
SCSS is only for eligible seniors, but it qualifies under 80C and currently offers a high govt-backed rate (example: 8.2% in 2025). If you (or a family member) qualify, SCSS can be an attractive way to use part of the ₹1.5 lakh limit while earning a strong fixed return.
5) Postal Life Insurance (PLI / RPLI) — Life cover + 80C
Why consider PLI/RPLI? Premiums paid for PLI/RPLI policies are allowed under Section 80C (subject to usual limits). Additionally, qualifying maturity or death proceeds may be exempt under Section 10(10D) if prescribed conditions are met — making PLI a hybrid of protection + tax planning. This is useful if you need both life cover and tax saving.
Three sample allocations for ₹1.5 lakh (practical ideas)
Choose one depending on your goal: retirement, short-term 5-yr safety, or child education.
A. Conservative — tax + safety (best for risk-averse)
- PPF: ₹75,000 (long-term tax-free growth)
- NSC: ₹50,000 (5-yr guaranteed return)
- PLI premium: ₹25,000 (life cover + 80C)
B. Income-oriented (seniors / near-retirement)
- SCSS: ₹1,00,000 (if eligible — high quarterly income)
- PPF: ₹50,000
C. Child planning (parents of a girl child)
- SSY: ₹1,00,000 (tax-free, dedicated to daughter)
- PPF: ₹50,000
How to claim Section 80C benefit properly (step-by-step)
- Keep receipts/certificates: For NSC, get the certificate/acknowledgement; for PPF/SSY, use the yearly passbook entries; for PLI, keep premium receipts.
- Report investments in your ITR under Section 80C — use the exact scheme names (NSC, PPF, SSY, SCSS, PLI).
- Do not exceed ₹1.5 lakh combined across all 80C instruments — excess contributions may not be eligible.
- For NSC, remember interest is taxable; but reinvested interest in NSC (the accrual) is treated practically as eligible for 80C during reinvestment years — consult your tax advisor for exact timing.
FAQ
Q: Can I mix PPF and NSC and still claim ₹1.5 lakh?
A: Yes — the ₹1.5 lakh limit is cumulative for Section 80C. You can split across PPF, NSC, SSY, SCSS and eligible insurance premiums (PLI) as long as total ≤ ₹1.5 lakh.
Q: Are NSC returns taxable?
A: Yes — interest on NSC is taxable. However, interest that gets reinvested during the term effectively allows you to claim 80C benefit on that reinvested amount in the relevant year. Consult a tax expert for precise tax timing.
Q: Is PPF totally tax-free?
A: Yes — PPF follows EEE: contributions are deductible under 80C, interest is tax-free, and maturity is tax-free. Use PPF for long-term tax efficiency.
Q: Which post office scheme gives the highest post-tax return under 80C?
A: It depends on your tax bracket and liquidity needs. For pure tax efficiency, PPF (tax-free interest) often wins for long term. For higher near-term yield, NSC/SCSS may give higher nominal rates but interest is taxable. Compare after-tax returns based on your slab.
Want a personalised allocation? Reply “Allocate ₹1.5L” and tell me: your age, tax slab, and goal (retirement/child/short-term). I’ll give a custom split + year-by-year expected returns (post-tax).Sources & notes: India Post official savings page; ClearTax NSC & PPF guides; Groww NSC calculator; PolicyBazaar/TaxBuddy on PLI/RPLI tax treatment; Economic Times coverage on rate reviews & TDS updates. Rates and tax rules may change — always verify with India Post or a tax advisor before investing.
Nice summary! One thing to consider for parents of a girl child is the Sukanya Samriddhi Yojana. While it has a long lock-in period, the tax-free returns are a big advantage. The flexibility of the other options, like SCSS for seniors, is also useful depending on your situation.