of late,PPF has been the most popular search term to land to this site . This is quite understandable considering this is the time when everyone scouts around for tax saving investments. Although the interest from PPF is 8% , the interest earned and paid from this account is also tax free. This makes PPF more attractive. Till the EEE policy on PPF remains, PPF would continue to draw money. (EEE- Exempt on investing, accrual and payout of interest).
With the stock markets lying low, tax saving MFs have gone a bit out of fashion.
POMIS ( Post office monthly income scheme) has also been included as an investment option. Lock in is 6 years and a effective yield of 8.9%. But interest earned and bonus (5%) given at the end of the term is taxable in the hands of investor.
PPF inspite of having a longer 15 year lock in term remains attractive beacuse of the tax free interest when compared to POMIS. So an investment decision for tax exemption in these schemes would also depend on the income tax bracket that the investor.
All said and done, If you are ready to lockin money for > 5 years anyway, my vote goes to SIP (Systematic investment plan) in ELSS ( Equity linked savings schemes in Mutual Fund)schemes as you would get a much higher return ( again tax free) as equities are supposed to outperform other asset classes in a longer investment horizon.