Investment
11 min read
February 5, 2025
PPF vs ELSS: Which is Better for Tax Saving in 2025?
Complete comparison of Public Provident Fund and Equity Linked Savings Scheme
Quick Comparison
| Feature | PPF | ELSS |
|---|---|---|
| Lock-in Period | 15 years | 3 years |
| Expected Returns | 7.1% p.a.(fixed) | 12-15% p.a.(market-linked) |
| Risk Level | Zero risk | High risk |
| Tax on Maturity | Tax-free (EEE) | LTCG tax above ₹1.25L |
| Min Investment | ₹500 | ₹500 |
| Max Investment | ₹1.5 lakh/year | No limit |
| 80C Benefit | Yes (₹1.5L) | Yes (₹1.5L) |
PPF: Safe & Steady
PPF Pros & Cons
Risk-free government-backed savings
Advantages
- Government guaranteed returns
- Completely tax-free (EEE status)
- No market risk
- Loan facility available after 3 years
- Partial withdrawal after 7 years
Disadvantages
- Very long lock-in (15 years)
- Lower returns compared to equity
- Interest rate can be revised by government
ELSS: High Returns, Short Lock-in
ELSS Pros & Cons
Market-linked wealth creation
Advantages
- Shortest lock-in among 80C options (3 years)
- Higher return potential (12-15% historically)
- Wealth creation through compounding
- Flexibility to invest via SIP
Disadvantages
- Market-linked risk
- Returns not guaranteed
- LTCG tax on gains above ₹1.25L
- Requires market knowledge
Returns Comparison: 10-Year Investment
10-Year Returns Analysis
Investment: ₹1.5 lakh per year for 10 years
PPF (7.1% p.a.)
Total Investment:₹15,00,000
Maturity:₹21,67,000
Completely Tax-Free
ELSS (12% p.a.)
Total Investment:₹15,00,000
Maturity:₹27,08,000
LTCG Tax:- ₹50,000
Net Amount:₹26,58,000
ELSS Advantage: ₹4,91,000 more returns!
Despite LTCG tax, ELSS provides significantly higher wealth creation
Who Should Choose PPF?
- ✓Risk-averse investors preferring safety
- ✓Those nearing retirement (50+ age)
- ✓Investors wanting zero-risk guaranteed returns
- ✓Long-term goal planners (child education, retirement)
Who Should Choose ELSS?
- ✓Young investors with long investment horizon
- ✓Those comfortable with market volatility
- ✓Investors seeking higher returns
- ✓Those wanting shortest 80C lock-in period
Best Strategy: Diversify Both
Smart Strategy: Diversify Both
Split your ₹1.5 lakh for balanced approach
Instead of choosing one, consider diversifying for optimal results:
PPF
₹75,000
Safety & Guaranteed returns
ELSS
₹75,000
Growth & Wealth creation
Benefits: This gives you both stability and growth potential while maximizing your ₹1.5L Section 80C benefit. Perfect balance of risk and return!
Calculate Your Investment Returns
Use our SIP calculator to project your ELSS returns over time.