Tax-saving investments are a key part of financial planning for salaried individuals in India. Among the various Section 80C options, ELSS (Equity Linked Saving Scheme) and PPF (Public Provident Fund) are two of the most popular choices.
You can calculate potential returns using the ELSS Calculator and evaluate long-term savings using the PPF Calculator to decide which option suits your tax and investment goals better.
What Is ELSS?
ELSS is an equity mutual fund that primarily invests in stocks. It comes with a 3-year lock-in period, the shortest among all 80C investments.
ELSS offers higher return potential but also involves market risk, making it suitable for investors with a long-term horizon and moderate to high risk appetite.
What Is PPF?
PPF is a government-backed savings scheme offering guaranteed returns. It has a 15-year lock-in period with partial withdrawal options after a few years.
PPF is ideal for conservative investors who prioritise capital protection and stable returns.
ELSS vs PPF: Old Tax Regime Comparison
Under the old tax regime, both ELSS and PPF qualify for deductions under Section 80C (up to ₹1.5 lakh).
However, ELSS returns are market-linked and potentially higher, while PPF offers fixed but predictable returns.
Impact Under the New Tax Regime
Under the new tax regime, 80C deductions are not available. This shifts the decision focus entirely to return potential and liquidity rather than tax benefits.
In such cases, ELSS may still be preferred for wealth creation, while PPF becomes more suitable for safe long-term savings.
Which Option Should You Choose?
If your goal is long-term wealth creation and you can handle volatility, ELSS may be more rewarding. If safety and guaranteed returns matter more, PPF remains a strong option.
Many investors choose to combine both to balance risk and stability.
Final Thoughts
ELSS and PPF serve different purposes. Understanding tax regimes, investment horizon, and risk appetite is crucial before choosing between the two.
FAQs
Is ELSS risky compared to PPF?
Yes, ELSS involves market risk, while PPF offers guaranteed returns.
Can I invest in ELSS under the new tax regime?
Yes, but without tax deduction benefits.
Which has a shorter lock-in?
ELSS has a 3-year lock-in, while PPF has 15 years.