03 Jan 2022


A concise ELSS vs. PPF comparison to see which tax-saving option will suit your needs best.

Key Takeaways

  • ELSS and PPF investments fall under Section 80C of the IT Act.
  • You can invest up to INR 1.5 Lakhs in these instruments.
  • These investments help reduce your tax outgo.
  • PPF is a safe option with a fixed benefit.
  • ELSS has risks, but it offers high returns on investment.

Did you know that provisions under Section 80 C of the Income Tax Act, 1961 can help you reduce your tax outgo while providing several benefits? Yes, you can get tax deduction benefits by investing in either Public Provident Fund (PPF) Schemes and/or Equity Linked Saving Schemes (ELSS). Let us take a look at the schemes and the difference between ELSS and PPF.

What is ELSS?

Equity Linked Saving Schemes or ELSS is the only mutual fund scheme that offers tax deduction benefits. As the name suggests, ELSS’ are investments in equities, which are traded in the market. You can either invest a lump sum amount in ELSS or opt for a Systematic Investment Plan, i.e., in instalments. All ELSS’ have a lock-in period of at least three years after you can withdraw or reinvest your funds.

What is PPF?

The Public Provident Fund is an investment scheme from the Indian government. You can invest in these long-term investments through your bank or designated post offices. PPF is an excellent investment for people who want to create a corpus and gain tax benefits. The Ministry of Finance decides and modifies PPF interest rates each quarter. Currently, the return rate for PPF is 7.1%. PPF comes with a fixed maturity tenure of 15 years.

Difference Between ELSS and PPF

An ELSS vs PPF comparison can help you understand the better investment plan for you:

  • Tax Benefits

    Both ELSS and PPF provide tax benefits for up to INR 1.5 lakhs on investment. However, PPF is an EEE (where E stands for exempt) instrument. The entire investment, i.e., the invested amount, interest earnings, and the maturity amount, are tax-free. As for ELSS, the returns are not entirely tax-free, and you have to pay a 10% long term capital gains tax if the returns exceed INR 100,000 in a year.

  • Investment Period

    With PPF, you need to stay invested for 15 years. You can make partial withdrawals only after seven years of investment. Conversely, ELSS has the shortest lock-in period among 80C instruments, i.e., three years. However, you get better returns if you stay invested for at least five years.

  • Investment amount

    The minimum amount for deposits is INR 150,000 for both PPF and ELSS. The maximum deposit amount for PPF is INR 150,000 p.a., while ELSS has no caps on the investment amount. However, ELSS tax benefits only apply to investments of INR 150,000.

  • Risk

    PPF is a government-backed, safe investment scheme with guaranteed returns. On the other hand, ELSS investments are subject to market risks, and returns depend on how the fund performs.

  • Return rate

    PPF return rates are determined by the Ministry of Finance and depend on the interest rates, which are modified each quarter. ELSS functions on the ‘high-risk high returns’ premise. Returns may be higher in a bullish market and lower in a bearish market.


While planning your investment and doing an ELSS vs PPF comparison, consider your preferred investment amount and risk profile before investing. Both ELSS and PPF are excellent tax-saving options that you need in your portfolio.

Download digibank by DBS on your smartphone, register and choose any tax-saving options from the menu. Also, open your savings account with us.

*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.