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Both save tax under Section 80C (old regime), but ELSS is an equity fund with the shortest lock-in and market returns, while PPF is a 15-year government scheme with fixed, tax-free returns.
| Factor | ELSS | PPF |
|---|---|---|
| Return | 10–12% (market, not guaranteed) | ~7.1% (fixed, tax-free) |
| Lock-in | 3 years (shortest in 80C) | 15 years |
| Risk | Market risk (equity) | None (govt-backed) |
| Tax on gains | LTCG 12.5% over ₹1.25L/yr | Fully tax-free (EEE) |
| 80C limit | ₹1.5 lakh | ₹1.5 lakh |
Verdict
ELSS suits investors comfortable with equity who want the shortest 80C lock-in and higher growth potential; PPF suits those who want guaranteed, tax-free safety. A mix balances the two. Both only help under the old tax regime.
Sources
- Income Tax Department (Section 80C)
- National Savings Institute (Ministry of Finance)
- AMFI — Association of Mutual Funds in India
Reviewed against primary sources. Rates and rules change — confirm current figures with the official source before acting.
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