Nov 132016

PPF or ELSS! Which is best to invest in order to save taxes? 

India, where people are supposed to pay taxes a lot. Especially when it comes to Income tax, which is often referred as the tax which is collected by the government on basis of individual’s income amount, well there are relaxations from paying taxes from certain types of incomes. On accounting that employees across the nation urges to invest their hard earned money in order to skip paying taxes.

elss vs ppf

Annual Income Percentage of Tax should Pay
Annual Income up to Rs.2.5 Lakh No Tax for the Income
Annual Income above 2.5 Lakh Should pay 10% of their income as tax amount
Annual Income for the next 5 Lakh from the fixed limit of 2.5 Lakh Should pay 20% of their income as tax amount from the base limit of 2.5 Lakh
Annual Income beyond the 5 Lakh limit after the base of 2.5 lakhs 30% of their income earned beyond the 5 Lakh from the base limit of 2.5 Lakh

Ways to save Taxes

Investment experts across the nation suggest two main ways by which individuals can save their income amount from paying taxes to the government. According to the Indian section 80C investing in Equity Linked Savings Scheme (ELSS) and Public Provident Fund (PPF) are eligible for tax relaxations.

For the retired person who doesn’t want to take any kind of risk when it comes to investments activities then preferring PPF (Public Provident Fund) would be the best and apt option to move.

What is PPF?

Well PPF is well known as Public Provident Fund which can able to be referred as the savings and also the effective tax saving methodology in country like India. The PPF is introduced by the ministry of Finance in 1968, which is fully supported by the central government of India in order to conduct small savings among the employees with guaranteed returns along the benefits of tax relaxations in the name of Income tax.

Investment procedure followed in PPF (Public Provident Fund)

  • According the terms and conditions, each and every citizens of Indian are eligible for opening a Public Provident Fund account, and able to invest on their own interest.
  • In order enjoy the various benefits offered by PPF organization, investors from India should invest minimum amount of Rs.500 (yearly deposit) for availing valid PPF account.
  • Also investors from India are allowed to invest the maximum amount of Rs. 1.5 lakhs in their own self PPF account on every financial year.
  • According to the new rule which is amended few years ago, each and every PPF account holder must include guardian details for their PPF account. For new registers, guardian details are mandatory to be mentioned.

What is ELSS?

ELSS known as Equity Linked Savings Scheme is a type of investment where investors can invest their money with the lock period of 3 years. Also this type of investment option would enable investors to avail various tax benefits. For individuals who are about to invest up to 1 lakh is eligible to avail tax benefits.

Protocols to be considered while investing in ELSS:

In order to avail effective financial planning from incomes in the name of ELSS (Equity Linked Savings Scheme) individuals must consider the factors like Investors Age, Income amount, Financial Goal and Risk Appetite involved.

If the investor well aware of the handling those factors the verdict of ELSS mutual funds would offers more benefits apart from tax relaxations under the Indian penal section 80C.

Which is favorite for Availing tax Relaxation PPF/ELSS?

  • Well ELSS as early mentioned it’s fully loaded with risk as the investment would be done mostly in stocks, however, being a mutual fund scheme with the fixed lock in period. Investors would surely improve their wealth by investing in ELSS with the fixed lock in period.
  • On the other hand the PPF is the government supported firm which has zero percent risk factor in it. However, the interest rates which are offered under the scheme would various on basis of certain fixed time period. But the PPF scheme would ensure on lending the interest to its investors.


For retired person or any individual who doesn’t want to take any risk when it comes to investment then opting for PPF would be the right option. However, for employees with having more working years can opt to ELSS mode of investment as it provides more benefits in terms of finance.

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