Eve 1k Questions 6 Answers 2 Best Answers 140 Points View Profile EveBeginner Asked: November 17, 20202020-11-17T18:53:08+05:30 2020-11-17T18:53:08+05:30In: Money What is the Difference Between ELSS and PPF? Hi, What is the Difference Between ELSS and PPF? ELSS vs PPF? Is ELSS safe? Is ELSS taxable after 3 years? Share Facebook Related Questions Is Chime bank a real bank? What is a Chime card? 1 Answer Voted Recent CrazyMan 17 Questions 1k Answers 1k Best Answers 53k Points View Profile Best Answer CrazyMan Guru 2020-11-17T19:15:50+05:30Added an answer on November 17, 2020 at 7:15 pm Difference Between ELSS and PPF Both ELSS – Equity Linked Savings Schemes and PPF – Public Provident Funds are the most popular tax-saving alternatives. Both of these financial products are eligible for the deduction of INR 1.5 lakh as per section 80C of the Income Tax Act. However, apart from being good tax-saving options, these two products do not have anything else in common. Let us understand both of these products here and understand the basic Difference Between ELSS and PPF. ELSS comes under the category of mutual funds that offer income tax benefits; as per the name, we can derive that these mutual funds invest in equities. These mutual funds are market-linked; that is why their return is based on their performance. If conditions are favorable, ELSS can generate more returns than PPF. ELSS can be further classified into two types: Close-Ended: In this, the number of units available for purchase is fixed. These are issued during the new fund offer (NFO) and open until all the units are sold. These are generally sold via brokers. Open-Ended: Individuals can invest in these funds through the lump sum corpus or through a Systematic Investment Plan (SIP). SIPs allow you to invest a fixed amount of money every month, like recurring deposits, unlike close-ended. PPF or Public Provident Fund is an investment scheme backed by the Government of India for the long term. PPF accounts can be created via post offices or any commercial bank, and the scheme allows income tax benefits along with the returns. The Government of India quarterly decides the interest rate on this investment. PPF carries a more extended locking period of fifteen years, which can further be carried for five years more. You can also avail of a premature withdrawal from the sixth year onwards. ELSS vs PPF In ELSS, the mutual funds’ investment is made in equities, while in PPF, you can make the long term investments. The ELSS is subject to market risks, and the rate of interest is decided by the market movements. At the same time, PPF is backed by the Government of India, and the government decides the interest rate on each quarter, and it is a low-risk investment. In ELSS, gains of over 1 lakh are considered a long-term capital gain and, therefore, taxable at the rate of 10%, while PPF investments carry the tax benefits of returns being totally tax-free. ELSS carries a lock-in period of only three years, while PPF investments have a lockin period of fifteen years, which can be extended for another five years. Tax saving fixed deposits usually suits investors who like to invest in a low or negligible investment option. Also, PPF serves the goal of long-term investment. As an investor, you should select the product that suits your personal objectives, financial goal, and understanding of the risks involved. This is the main difference between ELSS and PPF. 1 Share Share Share on Facebook Share on Twitter Share on WhatsApp Share on LinkedIn You must login to add an answer.Continue with FacebookContinue with GoogleContinue with Twitteror use Username or email* Password* Captcha* Remember Me! Forgot Password?