ELSS vs PPF are the both same or different from each other? 

Overview of PPF & ELSS

Equity Linked Savings Scheme and Public Provident Fund are both tax deductions following Section 80 C. Also, direct replacements for each other.

What is ELSS?

ELSS (Equity-linked savings) – tax saving mutual funds is a kind of mutual fund which is tax deductible and as mentioned above is under Section 80 C. An ELSS fund must invest about 80% at least of its assets in equities stocks. Therefore it’s subject to market volatility. Though such funds can further produce Large and great returns because of their equity element. These returns can perform into the range of 10 – 12% over the long run.

Must Read: How to invest in ELSS

How does an ELSS calculator work

What is PPF?

PPF(Public Provident Fund) is a government supported scheme. This has a fixed rate of return and also tax deductible under section 80C as mentioned above. The goverment has declared the interest on the PPF account every quarter. Due to Government assistance, the security and safety of the one’s capital and interest are High in the PPF.

Key Features of elss vs ppf


  • They have a lock-in-period of 3 years.
  • An investment can begin with an investment as under as Rs. 500 applying a SIP (Systematic Investment Plan).
  • Early or biased withdrawals are not enabled in the investment of an ELSS.
  • An ELSS has a capacity of providing returns range from 11-15% in 3 years as its a market-connected instrument.
  • ELLS can look forward in Long-Term Capital Gains. The rate can be 10%. As all equity mutual funds, long term capital gains up to 1 lakh rupees in a year on ELSS is free from tax.


  • Its has lock-in-period of 15 years
  • The least requirement of investment is Rs. 500.
  • The PFF has interest rate free.
  • The PPF rate for April – June 2019 (Q1 FY 2019-2020) is 8%.
  • Early or partial withdrawals are allowed after 5 years.
  • Loan facility is possible upon PPF after the 3rd year and allowed till the 6th year.

Firstly Less Look at a quick comparison of ELSS vs PPF

Basis of differenceELSSPPF
Lock-in period3 year 15 year
ReturnsExpected returns can vary within 12%- 15%.
A market-linked instrument including great volatility.
Fixed returns of 7.60% p.a.The government can change the rate. The previous rate was 12%.
SuitabilitySuits better for investors with balanced risk appetite.Suits better for risk-averse investors.
Minimum investment (Rs.)Rs.500Rs. 500 p.a
Maximum Investment (Rs.)Can invest up to Rs. 1,50,000 p.a.No investment limit
LiquidityHigh-Withdrawal at all time after the lock-in period.Low -Partial withdrawals after the expiry of 7 years from account opening year.
Loan AvailabilityNot AvailableA loan facility can be received after fulfilment of 3 years.
NRI can investYes NRI can invest No NRI cannot Invest
SafetyThe schemes are permitted by SEBI and are controlled under strict guidelines of AMFI.High – Govt supported
Mode of investmentDemand Draft, RTGS, Cheque and NEFT Cheque, Cash and NEFT.
Tax on MaturityThe tax on maturity is 10% on gains. Gains up to Rs. 1 lakh exempted.Exempt
Tax on ReturnJust gains are taxed.Exempt

Reading this table it’s easy to understand the base for the difference. Now let’s discuss them in more detail.

Contrast Between elss vs ppf

elss vs ppf

There are several parameters to distinguish these 2 schemes. Following are some of those :

  • Tax Deductions: Under Income Tax Act (elss vs ppf)

Both ELSS and PPF schemes are accountable for tax privileges under section 80C of the Income Tax Act. For these investments, the tax deductions appear under the EEE (Exempt, Exempt, Exempt) category.
Under this category, one does not have to pay tax in the whole investment cycle. Then, initially, the investment is tax-free. Therefore the returns are tax-free and ultimately, the entire income on investment is tax-free in the hands of the investor. Hence, there is no taxation on the maturity amount. Also, he returns of both these funds are tax exempt.

  • Withdrawal: Pre-mature (elss vs ppf)

Closing ELSS and PPF.In ELSS -Mutual Funds in the lock-in period is not enabled. Just in the case of death of the account holder, the withdrawal of PPF funds is acceptable and that too with few penalties.

  • The factor of Risk (elss vs ppf)

PPF Funds are given by the Government of India. It gives fixed interest rates. Therefore they are 1 of the reliable possible investments in India.
Though, some of the best ELSS Funds have the capacity of giving great returns across a long time period. The ELSS are riskier. It is a market-linked investment hence have a higher risk probability but renders high returns in return. One of the best way to know one’s ELSS amount of return is by using ELSS Calculator. It is a tax saving investment.

  • Limits in investment (elss vs ppf)

In PFF investments one cannot invest more than Rs. 1,50,000 in Under section 80C.
For Equity Linked Saving Schemes, there is no supreme limit defined. Though the advantages can be accessible just till an upper limit of Rs. 1,50,000.

  • Interest Rate (elss vs ppf)

The interest rate is fixed in PPF. While the ELSS Mutual Funds the returns fluctuate.
PPF invests in government Bonds the rate of interest is determined already. Currently, the rate of interest of PPF is 7.60% p.a.
Moreover, ELSS funds being spent in the equity markets, have mutable returns. The returns can run moderately high or somewhat low depending on the performance of the stock market.


Evaluate the amount of savings one wants to do for tax saving in Elss vs PPF. Based on the risk profile, one may distribute the amount among the two. One’s investments in PPF will show a constant increase in the savings. As the ELSS investments will take concern of the inflation-adjusted purposes within equity exposure across the long term. Choose wisely as always look which of them is benefiting one and providing high-grade returns with less risk factor.

For tax saving mutual funds one should explore our website WealthBucket.We render various services in mutual funds that are high- grade. Like Equity mutual funds, Liquid Mutual funds, debt mutual funds, Small-cap mutual funds, Income funds and many more. For enhanced assistance related to mutual fund spending, one can either call us at +91 8750005655 or mail us at contact@wealthbucket.in

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