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PPF vs ELSS: Which financial product gives better returns? Read here to know

Both the PPF and ELSS helps in saving income tax through investment under Section 80C of the Income Tax (I-T) Act.

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PPF vs ELSS: Which financial product gives better returns? Read here to know
Equity Linked Saving Scheme (Photo: DNA)
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Individuals have two most important financial goals to save their taxes and earn higher returns on investments. Two such financial instruments that help you achieve these goals are — PPF and ELSS. Both the PPF and ELSS help you in saving income tax through investment under Section 80C of the Income Tax (I-T) Act. 

Speaking to Zee Business, Vikas Puri, Vice-President at Quant Capital said that the ELSS returns are depended on the performance of the equity market. If the market performs poorly, then the return will be less than what it was expected. In the case of PPF, the rate of return is fixed by the government and one can ensure a fixed return on the investment. 

PPF vs ELSS — Interest rates:

As of now, the government is offering 8% interest rate on PPF investment. As it is revised quarterly, the state of the economy plays an important role in the determination of the interest rate. The ELSS returns depend on market performance. You can better return on this investment after five to ten years. In the past, ELSS has given better returns.

PPF vs ELSS lock-in period:

For PPF, the lock-in period is 15 years and after that, in the blocks of five years if you want to extend the tenure of the investment. Whereas, ELSS has a lock-in period of three years. 

ELSS is offered by Mutual Fund companies and money is invested in shares. 

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