PPF vs ELSS: the 80C choice, compared honestly

Published rates read from the issuer's own pages on 29 September 2026. Every figure in the table is computed, not quoted. We make a money-tracking app; we do not sell either product on this page and we are not financial advisers.

The numbers

Rs 12,500 a month is Rs 1.5 lakh a year, the 80C ceiling. PPF is compounded annually on the yearly total, which is how the scheme actually works; paying monthly rather than in April does slightly reduce the first year. The smaller figure under a projected column is the same sum at 8% — what a poor decade can look like. Neither figure is a promise. Computed on 29 September 2026; rounded to the rupee.

The rates used, and what they are worth

• equity mutual fund: 12% (an assumption, not a rate anyone offers) — An assumption used to project, not a rate. Equity funds can and do fall; a projection is not a promise and past returns do not carry forward.
• PPF: 7.1% — Set by the government each quarter. A change applies to your whole existing balance from the next quarter, so this is not locked in.

When ELSS is the better choice

• You want the money back sooner. Three years is the shortest lock-in in 80C; PPF is fifteen, with limited partial withdrawal from year seven.
• Your horizon is long enough to ride a fall, and this is not money you have earmarked for a date.
• You already hold enough in deposits and PF that the guaranteed part of your savings is covered.

When PPF is the better choice

• You want certainty. The rate can move each quarter, but it cannot be negative, and the maturity value never falls.
• The return is entirely tax-free at every stage — contribution, interest and maturity. ELSS gains above the yearly exemption are taxed when you sell.
• You have little or no other guaranteed saving. Employee PF, if you have it, already covers part of this role.
• The fifteen-year term is a feature, not a cost, because you would otherwise spend it.

Questions

Does 80C still apply?

Only under the old tax regime. The new regime has lower slab rates and does not allow most deductions including 80C, so if you are on the new regime the tax argument for either option disappears and the choice is purely about the return and the lock-in. Check which regime you are on before deciding.

Is the PPF rate fixed for 15 years?

No, and this is the most common misunderstanding. The government resets it every quarter, and a change applies to your whole existing balance from the next quarter, not just to new deposits. The 7.1% here is the current quarter. The rate on NSC, KVP and SCSS behaves the opposite way: it locks on the day you open and holds for the term.

Which gives more after tax?

Over fifteen years, the projection favours ELSS by a wide margin, but that comparison sets a guaranteed 7.1% against an assumed 12%. Run the ELSS column at 8% and the gap narrows sharply. PPF is tax-free throughout; ELSS pays long-term capital gains tax above the yearly exemption when you sell.

Can I do both?

Yes, and splitting the Rs 1.5 lakh is common. A frequent approach is to treat employee PF and PPF as the guaranteed part of a portfolio and use ELSS for the growth part, with the ratio set by how far away the money is needed.

What happens after the three-year ELSS lock-in?

Nothing automatic — you can stay invested. The lock-in is a minimum, not a term. Each SIP instalment locks for three years from its own date, so a monthly ELSS SIP has instalments unlocking on a rolling basis rather than all at once.

Run it on your own numbers

PPF calculator · SIP calculator · Old vs new regime calculator

Other decisions

SIP vs FD · SIP vs lumpsum · Flat vs reducing interest rate · All comparisons

Sources

1. https://www.nsiindia.gov.in/InternalPage.aspx?Id_Pk=181