Section 80C investment comparison · FY 2026-27
PPFVSELSS
Both give you Section 80C deduction. Which builds more wealth after tax — guaranteed PPF or market-linked ELSS?
Your investment details — adjust and see results instantly
₹
₹500₹2L
Monthly equivalent: ₹12,500/month · Max 80C: ₹1,50,000/year
years
3years25years
%
6%20%
Your income tax bracket(affects 80C tax saving calculation)
📈
ELSS gives a bigger corpus by ₹18.43 L
ELSS at 12% (after LTCG tax) outperforms PPF's guaranteed 7.1%. The higher the ELSS return, the wider this gap grows over time.
Choose ELSS for higher corpus80C saving: ₹6,75,000 (same for both)
Detailed comparison
PPF — Public Provident Fund
Rate7.1% guaranteed
Invested₹22.50 L
Interest earned₹18.18 L
Maturity corpus₹40.68 L
Tax on maturity₹0 (EEE — fully exempt)
After-tax corpus₹40.68 L
80C tax saved₹6,75,000
Net total benefit₹24.93 L
After-tax corpus
₹40.68 L
Lock-in: 15 years · Zero risk
VS
ELSS — Equity Linked Savings Scheme
Assumed return12% CAGR
Invested₹22.50 L
Gross gains₹40.57 L
Gross corpus₹63.07 L
LTCG tax (10%)−₹3,95,720
After-tax corpus₹59.11 L
80C tax saved₹6,75,000
Net total benefit₹43.36 L
After-tax corpus
₹59.11 L
Lock-in: 3 yrs/instalment · Market risk
ELSS wins by ₹18.43 L after tax· after-tax comparison at 12% ELSS return
At what ELSS return does it beat PPF?
₹150K/year for 15 years · PPF target: ₹40.68 L
| ELSS return | Gross corpus | LTCG tax | After-tax corpus | vs PPF |
|---|---|---|---|---|
| 8% | ₹43.54 L | −₹2,00,431 | ₹41.54 L | ELSS +₹85,674 |
| 10% | ₹52.24 L | −₹2,87,405 | ₹49.37 L | ELSS +₹8.68 L |
| 12%(selected) | ₹63.07 L | −₹3,95,720 | ₹59.11 L | ELSS +₹18.43 L |
| 14% | ₹76.61 L | −₹5,31,067 | ₹71.30 L | ELSS +₹30.61 L |
| 16% | ₹93.57 L | −₹7,00,725 | ₹86.57 L | ELSS +₹45.88 L |
Corpus growth — year by year
PPFELSS
Yr 1Yr 2Yr 3Yr 4Yr 5Yr 6Yr 7Yr 8Yr 9Yr 10Yr 11Yr 12Yr 13Yr 14Yr 15
PPF vs ELSS — head-to-head features
| Feature | PPF | ELSS |
|---|---|---|
| Returns | 7.1% guaranteed | Market-linked (historically 11–15%) |
| Return certainty | 100% guaranteed | Not guaranteed — varies year to year |
| 80C deduction | Yes — up to ₹1.5L/year | Yes — up to ₹1.5L/year |
| Tax on interest | Zero (tax-free) | 10% LTCG on gains above ₹1L/year |
| Maturity tax | Zero — EEE status | 10% LTCG on profits at redemption |
| Lock-in period | 15 years (extendable) | 3 years per instalment (shortest 80C) |
| Risk | Zero — government backed | Moderate to high equity market risk |
| Premature exit | Partial after 7 years | Full exit after 3-year lock-in |
| Loan facility | Yes (3rd–6th year) | No loan against ELSS |
| Min investment | ₹500/year | ₹500/month (most funds) |
| Max investment | ₹1,50,000/year | No maximum (80C limit ₹1.5L) |
| Best for | Risk-averse, long-term guaranteed | High return seekers, 5+ year horizon |
PPF vs ELSS — Which 80C Investment is Better in 2025?
Every salaried Indian with a Section 80C budget faces the same question: PPF or ELSS? Both qualify for the same ₹1.5 lakh annual deduction, but they are fundamentally different instruments with very different outcomes over 15+ years.
PPF offers a guaranteed 7.1% return with zero tax at any stage — no risk, no volatility, no decisions after the initial investment. ELSS invests in equity markets and has historically returned 11–15% CAGR over 10+ years — but with market risk, volatility, and LTCG tax at 10% on gains above ₹1 lakh per year. The right answer depends on your risk tolerance, time horizon, and what you'll actually do when markets fall 30%.
The breakeven ELSS return — when does ELSS beat PPF?
For a 15-year period, ELSS needs to deliver approximately 9.5–10% CAGR after tax(roughly 10.5–11% pre-tax CAGR) to match PPF's after-tax corpus. This is because PPF's EEE status effectively boosts the real return: 7.1% tax-free is equivalent to earning 10.1% pre-tax in the 30% tax bracket.
Historical context
Nifty 50 has delivered approximately 12–13% CAGR over 15-year rolling periods historically. Large-cap and diversified equity ELSS funds have averaged 11–14% CAGR over 10+ year periods. At these returns, ELSS clearly beats PPF in corpus terms — but past performance doesn't guarantee future returns, and not everyone can emotionally handle a 40% portfolio drop.
Who should choose PPF?
✓
Conservative investors — If market volatility causes you to sell during downturns, PPF's guaranteed return is better than a 12% expected return you never actually capture.
✓
Near-retirement savers — If you're within 7–10 years of retirement, capital protection matters more than maximising returns. PPF is ideal.
✓
Government employees — If you're already investing heavily in NPS and EPF (both market-linked in part), PPF provides diversification with guaranteed returns.
✓
Parents saving for children — PPF's 15-year tenure aligns with a child's education timeline. Zero risk means the corpus will definitely be there when needed.
✓
Low income taxpayers — If you're in the 5% or nil tax bracket, the 80C deduction benefit is small. PPF's guaranteed return matters more than ELSS's upside potential.
Who should choose ELSS?
✓
Long-term investors (10+ years) — The longer your horizon, the more equity smooths out volatility. 10+ years of ELSS historically delivers returns well above PPF.
✓
High income (30% bracket) — The higher your tax bracket, the more valuable the 80C deduction is — it's the same for both, but ELSS's higher returns compound more at the same deduction.
✓
Those who can stay invested through downturns — ELSS's advantage only materialises if you don't panic-sell during a 30–40% market correction.
✓
Young investors (under 40) — Time is the greatest asset in equity investing. Starting ELSS at 25 and holding 25 years gives the equity premium maximum time to compound.
✓
Those needing shorter lock-in — If you might need the money before 15 years, ELSS's 3-year lock-in is far more flexible than PPF's 15-year tenure.
Calculate your PPF corpus in detail
Year-by-year PPF statement with extension options
Frequently asked questions
Can I invest in both PPF and ELSS simultaneously?▼
Absolutely — and most financial advisors recommend exactly this. You can invest ₹1.5 lakh in either or split between both for the Section 80C deduction. For example: ₹75,000 in PPF (safe, guaranteed, tax-free) and ₹75,000 in ELSS SIP (market-linked, higher potential return). This gives you diversification of return type — a guaranteed floor from PPF and equity upside from ELSS. There's no rule preventing you from having both.
How is LTCG tax on ELSS calculated?▼
Long-Term Capital Gains (LTCG) on ELSS is taxed at 10% on gains above ₹1 lakh per financial year. 'Gains' = redemption value minus cost of purchase. Since each ELSS instalment has its own 3-year lock-in, they're all long-term by the time you can redeem. The ₹1 lakh exemption applies across all equity investments (ELSS, stocks, equity mutual funds) in a year — so if you have other equity gains, your effective ELSS exemption may be lower. Tax is calculated per redemption, not on the full accumulated corpus at once.
What happens to ELSS if I don't sell at 3 years?▼
Nothing. The 3-year lock-in simply means you cannot sell before 3 years. After 3 years, you're free to hold for as long as you want — there's no forced redemption. Most financial advisors suggest holding ELSS for 7–10+ years to get the full equity return benefit. The longer you hold, the higher the probability of good returns and the smaller the LTCG tax impact as your gains grow larger relative to the ₹1L exemption.
Is PPF better than NPS for retirement?▼
They serve different purposes. PPF is a general-purpose EEE savings instrument with complete flexibility at maturity. NPS is specifically for retirement — you must annuitise at least 40% at retirement, and the lump sum withdrawal is tax-free only up to 60% of corpus. NPS gets an additional ₹50,000 deduction under 80CCD(1B) beyond the 80C limit, which PPF doesn't. For retirement, most advisors suggest NPS for the additional deduction + employer NPS matching, and PPF as a supplementary instrument for tax-free wealth building.
What is the effective post-tax return of PPF for someone in the 30% bracket?▼
PPF's 7.1% is completely tax-free. To earn the equivalent after-tax in a taxable instrument, you'd need: 7.1% ÷ (1 − 0.30) = 10.14% pre-tax return. So PPF is equivalent to a 10.14% pre-tax FD for a 30% taxpayer. Additionally, the 80C deduction on contributions adds to the effective return. Including the deduction benefit on ₹1.5L/year at 30% saving (₹45,000/year), PPF's effective return rises further — making it an extraordinarily good risk-free instrument for high taxpayers.