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Is It Better To Invest In ELSS Or PPF?

Published On Feb 14, 2022

The government of India will pay employer and employee deposits to employees' EPF accounts for an extended three months from June to August 2020. The incentive is available to businesses with up to 100 employees and 90% of those employees earning less than Rs 15,000 per month. Non-government organisations' EPF contributions have been lowered from 12 percent to 10%. Taxes deduct a significant portion of your earnings. You must invest in the most tax-efficient investment accessible as an investor.
In the market, there are several possibilities for investing, saving, and earning interest on the principal amount. Fixed deposits, such as Paytm Payments bank fixed deposits, recurring deposit accounts, PPF, SIP, Equity Linked Savings Scheme (ELSS), mutual funds, and so on, are some of the investment alternatives available, however the application process for each account differs slightly. All of the above alternatives are open to people of any income level who want to save for the future; however, each option has a predetermined lock-in duration. Users are only offered the option to withdraw the entire amount with earned interest on the principal amount once the account reaches maturity. To know more about investing in ELSS or PPF, read on.

Is It Better To Invest In ELSS Or PPF?

What Is Exactly A Public Provident Fund (PPF)?

PPF, or Public Provident Fund, is a savings plan that allows people to set aside a portion of their salary each year in order to accumulate post-retirement savings or a retirement corpus. Individuals who contribute to the PPF plan are able to earn interest on the principal amount as well as tax advantages. It was created to encourage those who aren't covered by the Employee Provident Fund Organisation (EPFO) to save and construct a retirement fund. Under Section 80C of the Income Tax Act, the PPF programme provides a tax benefit of up to Rs. 1.5 lakh.

Following are some of the listed advantages for a person of having a PPF account -

1. The interest on your PPF balance is compounded every year annually.
2. PPF accounts allow you to deduct up to 1.5 lakh in taxes, and the lock-in term is 15 years, so it's a terrific way to save a lot of money for a long time.
3. Loans can be taken out of a PPF account.
4. A PPF account requires a minimum deposit of Rs. 500. Only PPF tenure can be extended in 5-year increments.
5. After the sixth financial year, a partial withdrawal is permitted.

What Is Exactly An Equity Linked Saving Scheme (ELSS)?

A mutual fund programme known as an equity linked savings scheme, or ELSS, is a form of mutual fund. Investing in the stock market or equities is how the strategy works. A tax deduction of up to Rs. 1.5 lakh is available under section 80C of the Income Tax Act. ELSS, unlike PPF, is a short-term savings investment programme with a three-year lock-in period. After three years from the date of purchase, an individual can sell the plan. The best method to get the most out of your ELSS money is to keep them invested for as long as possible.

Following are some of the advantages of ELSS that make it a popular choice among users -

1. Under section 80C of the Income Tax Act, ELSS investors can claim tax deductions of up to Rs. 1.5 lakh each year.
2. There is a three-year lock-in term.
3. If the money invested is not redeemed before the maturity date, the amount invested can be kept.
4. Under the ELSS system, you must contribute a minimum of Rs. 500 every month.
5. So because the money is predominantly invested in stocks, the customer is entitled to a greater rate of interest from the market.


Both ELSS and PPF have their own set of perks, drawbacks, features, and tax advantages. A person should pick one based on his or her needs and the ability to invest for a predetermined amount of time.

Also read- Some Reasons You Should Invest In A Pension Plan

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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