PPF vs ELSS for Tax Saving Under Section 80C: What You Need to Know

Quick answer

Section 80C (₹1.5L limit) is only relevant if you use the old tax regime. Under the new regime, 80C deductions are not available. If on the old regime, PPF suits conservative investors (guaranteed 7.1%, EEE, 15-year lock-in); ELSS suits those comfortable with equity risk and a 3-year lock-in.

When this matters

This is useful when you want to compare scenarios using your own numbers instead of generic rules. It is designed for Indian households using Niyamfin calculators for private, browser-side estimates.

Key numbers or assumptions

• PPF interest rate is set by the government quarterly — currently 7.1% p.a. (check for current rate).
• ELSS returns are market-linked and not guaranteed — historical category returns have varied widely.
• EEE status for PPF: contribution deductible, interest tax-free, maturity tax-free.

Example calculation

If you are in the 30% slab and use the old regime, investing ₹1.5L in PPF saves ₹45,000 in tax. The same ₹1.5L in ELSS also saves ₹45,000 but gives market-linked returns with shorter lock-in.

Common mistakes

• Investing in 80C instruments when on the new regime — no tax benefit applies.
• Treating PPF as an emergency fund — it has a 15-year lock-in with limited partial withdrawal.
• Comparing PPF and ELSS only on returns without considering lock-in and risk.

What to do next

First decide whether the old or new regime suits you better this year. If old regime, calculate how much 80C room remains after EPF contributions, then choose between PPF and ELSS based on your risk comfort.

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