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Tax-saving guide

ELSS vs PPF for 80C: which tax-saver should you pick?

Both let you claim up to ₹1.5 lakh under Section 80C, but they are opposites: ELSS is an equity mutual fund with the shortest lock-in and market returns; PPF is a fixed, government-backed, tax-free scheme. Here is how to choose.

Side by side

FeatureELSSPPF
ReturnsMarket-linked, ~12%Fixed 7.1%
RiskModerate–high (equity)None (guaranteed)
Lock-in3 years (shortest)15 years
Tax on gains12.5% LTCG over ₹1.25L/yrFully tax-free
Best forGrowth, shorter lock-inSafety, guaranteed

A worked example: ₹1.5 lakh a year for 15 years

In PPF at 7.1%, that grows to roughly ₹40.7 lakh, completely tax-free. In ELSS at an assumed 12%, the same amount could reach around ₹62 lakh before a small LTCG tax — meaningfully more, but with market ups and downs along the way.

When ELSS wins

You have a long horizon, can tolerate volatility, and want the shortest lock-in with the highest growth potential.

When PPF wins

You want zero risk, guaranteed tax-free returns, and a safe base you never have to watch. Many investors simply use both.

Project both

See what each could grow to on your 80C investment.

ELSS/SIP Calculator →PPF Calculator →

Frequently asked

Which has the shorter lock-in?
ELSS, by far — just 3 years, the shortest of any 80C option. PPF locks your money for 15 years (with limited partial withdrawals from year 7).
Are ELSS returns taxed?
ELSS gains are long-term capital gains, taxed at 12.5% above the ₹1.25 lakh yearly exemption. PPF is completely tax-free (EEE) — no tax on the maturity amount at all.
Can I split my 80C between both?
Yes, and it is often smart: PPF for a guaranteed, tax-free base and ELSS for higher long-term growth. Together they balance safety and returns.

ELSS returns assumed at 12% for illustration; actual returns vary. Rates as of FY 2025-26. Estimates for planning, not investment advice.