PPF vs ELSS


Public Profit Fund (PPF) investment plan was introduced by Ministry of Finance, with the aim of providing saving schemes along with return on investment and tax exemption too. A minimum of Rs500 yearly is required to keep the account active and maximum of Rs. 1.5Lacs in any number of installments ranging from 1 to 12. Incase no deposit is made in a particular year, the account will be deactivated. Since PPF account is backed by government, there is hardly any risk on investment.

Equity Linked Saving Scheme (ELSS) invests your money in share market. Investment in shares is to maximize the return on investment. Equity can provide with best returns in long term goal but it totally depends on the entry and the exit. If an investment is made when the market is low and redeemed when the market is at its peak, one can make whooping profit out of it. But ELSS is high on risk as the share market is not stable.

PPF vs ELSS Comparison

PPF ELSS
Public Provident Fund (PPF) is a savings cum tax saving instrument Equity Linked Saving Scheme (ELSS) is a tax saving mutual fund instrument
PPF is exempted from all taxes, it is tax free ELSS is exempted only under section 80C of the Income Tax Act
PPF is at no risk or less risk since it is backed by Central Government ELSS is at higher risk, since investment in mutual funds is subject to market risk.
The only risk a PPF investment can face is due to inflation or deflation The risk with ELSS investment is according to the stock market. Stock market doesn’t remains the same.
Return on Investment is at 8.7% Return on investment is at 15% or higher
Lock in period for PPF is of 15 years Lock in period for ELSS is 3 years
Premature withdrawals can be done Premature withdrawals cannot be done
Maximum investment of Rs. 1.5 L p.a can be done in 1-12 installments No such deposit limit in case of ELSS.

 

Both PPF and ELSS have their advantages and disadvantages, opting for which form of investment totally varies from individual to individual. People who can take risk can go for ELSS and those who prefer a systematic way of long term investment can opt for PPF.

Back to PPF calculator