Should you stop investing in PPF, SSY, NPS when switching to the new tax regime?

new tax regime has become even more alluring after the personal income tax amendments in Budget 2025. However, this shift comes with a price — the inability to claim deductions on investments that save taxes.

For investors who primarily invested in Section 80C instruments to avail tax benefits, the shift to the new tax regime presents an important dilemma—should they continue with these investments or discontinue them altogether? While the new tax regime eliminates the advantage of deductions, discontinuing certain investments like Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and National Pension System (NPS) without careful consideration can have unintended consequences.

Also read: NSC vs bank FDs: Which is a better tax saving option?

What are the penalties for not making minimum contributions to PPF, NPS, SSY?

Some Section 80C investments come with mandatory minimum contribution requirements. If these are not met, investors may face penalties or even risk their accounts becoming inactive.

Here’s what you need to keep in mind for each of these investments:
PPF: If you fail to make the contribution by March 31, 2025, then you will have to pay a penalty of Rs 50 for each year you fail to make the minimum contribution along with an arrear subscription of Rs 500 for each year.

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Also read: Have income tax slabs for FY 2025-26 in new, old tax regime changed in new Income Tax Bill?

SSY: If the minimum deposit is not made in a financial year, then it will be treated as a defaulted account.