Tax & Savings
Contents
PPF vs ELSS
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Both qualify under Section 80C — but with completely different risk-return profiles. Pick the right tax-saver.
Visual Comparison
Key Differences
| Feature | PPF | ELSS |
|---|---|---|
| Return | 7.1% p.a. (government set) | Market-linked (10–15% historical) |
| Risk | Zero — government-backed | Equity market risk |
| Lock-in | 15 years (partial withdrawal allowed) | 3 years (shortest among 80C options) |
| Tax on returns | EEE — fully tax-free | LTCG 12.5% above ₹1.25L |
| 80C benefit | Up to ₹1.5 lakh | Up to ₹1.5 lakh |
When to Choose Which
Choose PPF
- Very low risk appetite
- Long-term wealth creation with guaranteed returns
- Tax-free retirement corpus (15yr horizon)
- Low income tax bracket
Choose ELSS
- Can handle market volatility for 3+ years
- Want higher potential returns
- Shortest lock-in among 80C options
- High income bracket — tax saving is priority
Frequently Asked Questions
ELSS has historically delivered significantly higher returns (10–15%) vs PPF (7.1%). ELSS also has the shortest lock-in (3 years). PPF suits risk-averse investors.
Yes. PPF is a government-backed scheme. Returns are guaranteed and fully tax-free (EEE — exempt at investment, growth, and withdrawal).
Equity Linked Saving Scheme — a type of mutual fund that qualifies for ₹1.5 lakh Section 80C deduction, with a mandatory 3-year lock-in.
Yes, within the ₹1.5 lakh 80C limit. A common split: ₹50K in PPF (stability) + ₹1L in ELSS (growth).
ELSS invests in equity — short-term returns can be negative. But over 5+ years, equity ELSS funds have delivered positive returns historically.