New Delhi: If you are an individual whose investments are decided by Income Tax deductions then you may consider putting money in Public Provident Fund (PPF) or ELSS. PPF is a fixed-income scheme with 7.1 per cent annual rate of interest, while ELSS or equity-linked savings scheme offers market-linked returns.

PPF vs ELSS: Tenure

PPF scheme tenure is 15 years fixed and extendable in tenure of 5 years. The minimum lock-in period is 15 years.
ELSS has a minimum lock-in period of 3 years. Investments held for more than this tenure is taxable under LTCG on gains worth more than Rs 1 lakh.

PPF vs ELSS minimum and maximum investment

PPF minimum investment starts at Rs 500. ELSS minimum investment is also the same.
PPF investment cap is Rs 1.5 lakh per year.
There is no cap on ELSS investments.

PPF vs ELSS tax benefits

PPF is eligible for tax benefits up to Rs 1.50 lakh under Section 80C of the I-T Act, under the old tax regime.
PPF investments are of the exempt-exempt-exempt tax category.
ELSS also allows tax deductions up to Rs 1.50 lakh under the old tax regime.
ELSS is also an EEE tax scheme. However, if ELSS investments are maintained beyond 5 years, they turn taxable under LTCG.

PPF vs ELSS returns calculator

PPF calculator shows that if you invest Rs 1.50 lakh per year for 15 years, at a 7.1 per cent interest rate, the interest earned will be Rs 18,18,209, taking the maturity value to Rs 40.68 lakh.

If you invest Rs 1.50 lakh for a 3-year period at a 12 per cent interest rate, you will earn a return of Rs 2,10,739. If you invest Rs 12,500 per month in ELSS SIPs for 15 years, you will earn an interest of Rs 40,57,200 on a principal amount of Rs 22,50,000 taking the maturity value to Rs 63,07,200. However, it must be noted that this amount will invite LTCG tax since ELSS investments are only tax-free for up to 3 years.

 PPF vs ELSS: Both these schemes offer deductions up to Rs 1.50 lakh under the Income Tax Act. However, this is where the similarities end. Know how these schemes compare in terms of tenure and returns.  Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today