Most advice about where to invest in India stops at the framework: safety for short-term money, a mix for the middle, equity for the long run. That framework is correct and almost useless on its own, because it contains no numbers. What actually decides an outcome is the rate, the lock-in, the tax treatment and which tax regime you are on — and on that last point, a great deal of published advice is now several years out of date.
This guide is the numbers underneath the framework, sourced and dated.
Start with the tax regime, not the instrument
This is the single most consequential change and the one most guides have not caught up with. The new tax regime is the default. Under it, Section 80C is not available.
None of that makes PPF a bad instrument. It makes PPF a 7.1 per cent sovereign-backed long-term deposit rather than a tax shelter, and that is a different thing to compare against alternatives. The regime choice itself is worth settling before choosing products — it decides which deductions, if any, actually apply to what you put in.
What each option actually pays, and what it locks up
| Instrument | Rate | Lock-in / tenure | Rate behaviour |
|---|---|---|---|
| EPF | 8.25% (FY 2025–26) | Until retirement, with permitted withdrawals | Declared annually by the CBT |
| SCSS | 8.2% | 5 years | Locked on the day you open |
| NSC | 7.7% | 5 years | Locked on the day you open |
| PPF | 7.1% | 15 years | Floats — a change applies to your whole balance |
| REITs | 5–7% distribution yield | None — listed and tradable | Varies with property income |
Small savings rates are as notified for the July–September 2026 quarter and have been unchanged for nine consecutive quarters; the Ministry of Finance resets them shortly before each quarter begins. The EPF rate for FY 2025–26 was notified on 1 July 2026 and is the third consecutive year at 8.25%. REIT yields are a market observation, not a notified or guaranteed figure.
What the tax actually takes
Returns are quoted before tax and received after it. The rules changed materially on 23 July 2024 and the changes are not intuitive.
| Asset | Holding period | Tax |
|---|---|---|
| Equity MF and listed shares | More than 12 months | 12.5% on gains above ₹1.25 lakh a year |
| Equity MF and listed shares | 12 months or less | 20% (Section 111A) |
| Debt MF bought on/after 1 Apr 2023 | Any | Your slab rate — no long-term benefit at all |
| Debt MF bought before 1 Apr 2023 | More than 24 months | 12.5%, without indexation |
| FD interest | Any | Your slab rate, taxed as it accrues |
The ₹1.25 lakh annual exemption is combined across equity mutual funds and listed shares — not ₹1.25 lakh for each. Indexation was removed for most long-term assets from 23 July 2024. Debt funds bought on or after 1 April 2023 fall under Section 50AA as ‘specified mutual funds’ and lost long-term treatment entirely.
Two implications are worth drawing out. A 30 per cent taxpayer earning 7 per cent on a fixed deposit keeps roughly 4.9 per cent after tax, because FD interest is taxed at slab as it accrues. And the debt mutual fund advantage that existed before April 2023 is gone — for new money, a debt fund and an FD are now taxed the same way, which removes most of the reason people held debt funds in the first place. If you are weighing deposits specifically, we have compared them in detail in our guide to fixed deposits, recurring deposits and the overdraft against a deposit.
Matching the horizon to the instrument
With the numbers established, the framework becomes usable rather than generic.
| Horizon | The constraint | What fits that constraint |
|---|---|---|
| 0–3 years | You cannot afford a drawdown you have no time to recover from | Deposits, T-Bills via RBI Retail Direct, very short duration debt |
| 3–7 years | Enough time for some volatility, not enough to guarantee recovery | A deliberate equity–debt split, reduced as the date approaches |
| 7–10+ years | Time to absorb full market cycles | Diversified equity, with EPF/PPF as the stable component |
| Retirement | Decades, plus a structured exit requirement | EPF, NPS, equity — subject to the NPS rules below |
This is a description of what each horizon can absorb, not a recommendation of allocation percentages. The right split depends on how fixed your goal date is, your existing emergency fund and your tax position — none of which this page knows.
Equity: what the index has actually returned
Long-run equity numbers are quoted constantly and almost always in the most flattering version. The distinction that matters is between the Total Return Index, which assumes every dividend is reinvested, and the Price Return Index, which is what the index level actually does.
The 1.35 percentage point gap is dividends. You only receive it if they are actually reinvested, and it is reduced further by fund expenses and by tax on realised gains. Source: Nifty 50 Whitepaper 2026, NSE Indices.
| Period | Annualised return |
|---|---|
| 20 years to 27 Feb 2026 — Total Return | 12.44% |
| 20 years to 27 Feb 2026 — Price Return | 11.09% |
| 10 years, as of Feb 2026 | 13.7% |
| 25 years, as of 2026 | 12.4% |
| 15 years and beyond | Settles in the 11–12% range |
Source: NSE Indices Limited. These are historical figures for an index, not a forecast and not what any individual investor received. Actual outcomes differ by entry timing, fund expense ratio, tracking error and tax.
A twenty-year average says nothing about the year you happen to need the money.
That is the real argument for reducing equity as a goal approaches, and it is not about expected returns at all. The long-run average is reassuring; the distribution around it is not. An index that averages 12 per cent over two decades still contains individual years that would destroy a goal falling due in one of them.
Real estate and REITs
Property deserves a place in this discussion, and the reason it is often left out of financial-product comparisons is that it behaves differently from everything else in the list: large indivisible ticket size, slow sale, concentrated in one location, with ongoing maintenance, tax and vacancy costs. None of that makes it a poor asset. It makes it an awkward one to compare on a rate table.
There is a structural point worth stating plainly: if you already own the home you live in, buying a second property does not diversify your portfolio. It concentrates it further into Indian residential real estate, and often adds leverage on top.
| Measure | Position |
|---|---|
| Number of listed REITs | 5 — Embassy Office Parks, Mindspace Business Parks, Brookfield India, Nexus Select Trust, Knowledge Realty Trust |
| Mandatory distribution | At least 90% of net distributable cash flows |
| Distribution yield | Roughly 5–7%, typically paid quarterly |
| Minimum investment | One unit — SEBI reduced the lot size |
| Typical unit price | ₹300–500 for the office REITs; ₹80–120 for Nexus Select |
SEBI also registers Small and Medium REITs as a separate category. Yields are market observations that move with property income and unit price; the 90% distribution requirement is a regulatory obligation, not a yield guarantee.
The practical significance of the one-unit minimum is easy to miss. Real-estate exposure that once required lakhs of rupees and a registration process now costs the price of a single listed unit, trades through an ordinary demat account, and can be sold on a normal settlement cycle. That does not make it equivalent to owning property — you get commercial rental income, not a home — but it removes the capital barrier entirely.
Two things that changed while the advice stayed the same
Sovereign Gold Bonds have been discontinued
A great deal of Indian investment writing still recommends SGBs. They are not available. No new tranche has been issued since the 2023–24 Series IV in February 2024, the Finance Ministry confirmed discontinuation at its February 2025 post-Budget briefing, and no issuance calendar exists for FY 2026–27. The reason is straightforward: the government paid 2.5 per cent annual interest and redeemed at gold’s full market price, which became an expensive way to borrow as gold rallied.
Existing bonds remain valid and mature on their original terms. But from 1 April 2026, the capital gains exemption at redemption applies only to original RBI subscribers holding to maturity. Buy an SGB on the secondary market and you pay 12.5 per cent long-term capital gains, or slab-rate short-term tax, on redemption or sale. For new gold exposure, gold ETFs and gold funds are the available route.
NPS now lets you withdraw more than the tax law exempts
EPF sits alongside NPS as the other retirement pillar, and the two work quite differently — we have set out the EPF, EPS and EDLI structure in our guide to the three schemes behind one salary deduction.
What this guide deliberately does not do
Final Verdict
The honest summary of where to invest in India is that the framework everyone repeats — safety for near money, equity for distant money — is right, and contributes almost nothing, because the decision is made by details the framework omits.
Three of those details do most of the work. Your tax regime determines whether half the classic recommendations retain any advantage at all, and under the default regime they do not. The lock-versus-float distinction determines whether opening an account before a quarterly reset is worth anything, and for SCSS, NSC, KVP and MIS it is. And the tax treatment determines what you keep: a 7 per cent deposit is about 4.9 per cent after tax in the 30 per cent bracket, while equity held beyond a year is taxed at 12.5 per cent above a combined ₹1.25 lakh exemption.
Two further things should change how older advice is read. Sovereign Gold Bonds are no longer issued, so any list still featuring them is stale. And NPS now permits an 80 per cent withdrawal that the Income Tax Act only exempts to 60 per cent — a live discrepancy rather than a technicality.
Everything above is checkable. The rates come from Ministry of Finance notifications, the index figures from NSE Indices, the REIT terms from SEBI’s framework and the tax rules from the Finance Act. Verify the quarter before acting, because small savings rates are reset every three months, and a guide is only as current as the notification behind it.
Frequently asked
- Does PPF still give a tax deduction?
- Only if you are on the old tax regime. The new regime is the default and Section 80C is not available in it, so PPF contributions carry no deduction for taxpayers on the new regime. The same applies to ELSS and to your own NPS contribution — the ₹50,000 under Section 80CCD(1B) has been disallowed under the new regime since Budget 2025. The only meaningful deduction that survives is Section 80CCD(2), your employer’s NPS contribution of up to 14 per cent of basic salary.
- What are the current PPF, NSC and SCSS interest rates?
- For the July–September 2026 quarter, PPF is 7.1 per cent, NSC 7.7 per cent and SCSS 8.2 per cent. These rates have been unchanged for nine consecutive quarters. The Ministry of Finance resets small savings rates shortly before each quarter begins, so check the current notification before acting.
- Which small savings rates are locked and which can change?
- SCSS, NSC, KVP and Post Office MIS lock the rate on the day you open the account, so the rate applies for the full term. PPF and Sukanya Samriddhi float, meaning a rate change applies to your entire accumulated balance, not just to new contributions.
- How much tax do I pay on mutual fund gains?
- Equity mutual funds and listed shares held more than twelve months are taxed at 12.5 per cent on gains above a combined ₹1.25 lakh a year; held twelve months or less, at 20 per cent under Section 111A. Debt funds bought on or after 1 April 2023 are taxed at your slab rate with no long-term benefit at all. These rules took effect on 23 July 2024 and indexation was removed for most long-term assets.
- Can I still buy Sovereign Gold Bonds?
- Not new ones. No tranche has been issued since the 2023-24 Series IV in February 2024, the Finance Ministry confirmed discontinuation for fresh issues at its February 2025 post-Budget briefing, and there is no issuance calendar for FY 2026-27. Existing bonds remain valid, but from 1 April 2026 the capital gains exemption at redemption applies only to original RBI subscribers holding to maturity. Gold ETFs and gold funds are the available route for new exposure.
- How much of my NPS corpus can I withdraw tax-free?
- There is currently a gap between two rulebooks. Since December 2025 PFRDA permits non-government subscribers to take up to 80 per cent as a lump sum, with a 20 per cent annuity floor where the corpus exceeds ₹12 lakh, and a corpus of ₹8 lakh or less can be taken entirely. But Section 10(12A) of the Income Tax Act still exempts only 60 per cent, so withdrawing the full 80 per cent makes the extra 20 per cent taxable at your slab rate.
