ELSS vs PPF – Which is the Best Option for Investment?

byPriyanka JuyalLast Updated: August 14, 2023

Discover the perfect investment that offers both profitable returns and tax savings! With a plethora of options available, two popular choices stand out: Equity Linked Savings Scheme (ELSS) and Public Provident Fund (PPF). ELSS, a tax-saving mutual fund scheme, leverages market performance for potential gains. Meanwhile, PPF, a government-backed savings scheme, paves the way for long-term wealth creation. 

In this blog, we’ll break down the differences between PPF and ELSS, making it easy for you to decide which investment option is better for you.

What is the Difference Between ELSS and PPF?

Before you make a choice, it’s essential to understand the contrasts between ELSS and PPF. Let’s break down the key differences between these two investment options:

PPF & ELSS: Which Is Best for Investment?

When deciding between the Public Provident Fund (PPF) and Equity Linked Saving Scheme (ELSS) for investment, it’s essential to consider key factors. PPF is a government-backed, fixed-interest option with a 15-year maturity period and tax benefits under Section 80C. It offers stability and safety. On the other hand, ELSS is an equity-based mutual fund with a 3-year lock-in period, potential for higher returns, and similar tax advantages. ELSS carries market risks and suits individuals with a higher risk appetite and longer investment horizon. The choice depends on risk tolerance, investment horizon, tax planning needs, and diversification goals.

What is PPF?

PPF (Public Provident Fund) is a powerful retirement savings scheme with attractive interest rates and tax benefits. With a 15-year lock-in period, it provides long-term stability for your financial future. You can make partial withdrawals and even avail loans if needed. Whether you’re an Indian citizen, NRI, or a parent/guardian, PPF is a great choice. Learn more about PPF and how it can benefit you. Take charge of your retirement planning today!

What is ELSS?

ELSS (Equity Linked Savings Scheme) is a tax-saving mutual fund scheme that invests in the stock market. It offers tax benefits under Section 80C of the Income Tax Act. With a short lock-in period of 3 years, ELSS provides potential for higher returns. Consider factors like fund performance and investment horizon before investing. Both online and offline methods are available to open an ELSS account. Ensure you are KYC compliant before investing. Read more about ELSS account for better understanding. Start investing in ELSS for potential long-term growth and tax savings.


What is the difference between ELSS and PPF?

PPF is a government-backed savings scheme with a 15-year lock-in period, while ELSS is an equity-linked mutual fund scheme with a 3-year lock-in period.

Can I make partial withdrawals before maturity in PPF and ELSS?

Yes, partial withdrawals are allowed in PPF but not in ELSS.

What are the tax benefits offered by PPF and ELSS?

PPF offers tax exemption on investment, interest earned, and maturity amount under Section 80C. ELSS is subject to a 10% long-term capital gains tax if returns exceed Rs. 1 lakh.

How long can the tenure be extended in PPF?

The tenure of PPF can be extended in blocks of 5 years.

What is the minimum and maximum amount that can be deposited in PPF and ELSS?

In PPF, the minimum annual deposit is Rs. 500, and the maximum is Rs. 1.5 lakh. In ELSS, the minimum monthly deposit is Rs. 500, and there is no maximum limit.

Who offers PPF and ELSS?

PPF is offered by banks and post offices, while ELSS is offered by mutual fund houses.

Which is better for investment, PPF or ELSS?

The choice between PPF and ELSS depends on factors like risk tolerance, investment horizon, tax planning needs, and diversification goals. PPF offers stability and safety, while ELSS has the potential for higher returns but carries market risks.

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