ELSS vs PPF Comparison

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In this article, we are going to discuss Equity Linked Savings Scheme and Public Provident Fund ie. ELSS vs PPF Comparison.

Tax Saving Tips


In this article, we are going to discuss Equity Linked Savings Scheme and Public Provident Fund ie. ELSS vs PPF Comparison. Both are most popular tax saving options amongst the investors. However, both the investments have its own pros and cons. Let us understand the features of both investment options.

In our earlier articles, we have comapred ELSS vs Tax saving FDs and ELSS vs NSC.

ELSS vs PPF Comparison

Purpose of Investment

  • ELSS : In case of Equity Linked Savings Scheme (ELSS), both the purposes – building funds for long term goals and tax saving are served.
  • PPF : PPF is a Long-Term savings instrument meant for the self-employed and the workers of the unorganized sector.

ELSS vs PPF Comparison

ELSS vs PPF Comparison
ELSS vs PPF Comparison
What Are ELSS & PPF?
  1. ELSS : Equity Linked Saving Schemes are the diversified equity oriented mutual funds mostly invets in large cap stocks.
  2. PPF : PPF are Long-term Saving Instrument where Investment is done in Government Bonds. The main objective behind PPF is to avail the old-age security to the self-employed and workers of unorganized sector
  1. ELSS : Resident Individuals, HUFs & NRIs
  2. PPF : Only Resident Individuals & HUFs
Minimum & Maximum Investment
  1. ELSS : Minimum Investment = Rs.500, Maximum Investment = No limit
  2. PPF : Minimum Investment = Rs.500, Maximum Investment = Rs.1,50,000 (Investments can be made in lump sum or in a maximum of 12 installments in a financial year)
Rate of Return & Risk associated
  1. ELSS :
    • Rate of Return = 11%-14%
    • As the investments are linked with the market sentiments, it is riskier as compared to PPF.
  2. PPF :
    • Rate of Return = 8%
    • As the investments are made in Government bonds, it is a safer option with guaranteed returns.
Lock in Period
  1. ELSS :
    • Lock in period is 3 years
    • Partial Withdrawal : No partial withdrawal is possible during the lock-in period
  2. PPF :
    • Maturity period of PPF is 15 years. However, if account holders are in need of funds, and wish to withdraw before 15 years, the scheme permits partial withdrawals from year 7 i.e. on completing 6 years. Thus, lock in period can be said to be 7 years.
    • Partial Withdrawal : From 7th year of investment, investor can withdraw once in a year. (Limits are set by PPF rules) It allows to withdraw money for the purpose of Medical Treatment or higher education etc.
Taxability of Income
  1. ELSS : LTCG is taxable @ 10% without indexation benefit. Dividend is exempt from tax.
  2. PPF : It comes under Exempt-Exempt-Exempt (EEE) category. Interest and maturity amount is exempt from tax.


  • ELSS and PPF both are efficient tax saving options, each option has its own benefits. Investor should select the best suitable option according to his priorities.
  • If investor wishes to earn fixed interest with lesser risk, he can invest in PPF.
  • If investor wishes to take risk and earn higher returns in lesser time period, he can definitely invest in ELSS. Though the lock in period of ELSS is lower, this investment should be linked with mid-term and long-term financial goals. Therefore, the ideal time of withdrawal can be targeted between 5-7 years from the investment made.

For further details on this comparison, please watch our video on ELSS vs PPF. The link is given below.

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