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Equity Linked Savings Scheme vs Public Provident Fund

Difference between Equity Linked Savings Scheme and Rajiv Gandhi Equity Savings Scheme

Basis of DifferenceEquity Linked Savings Scheme (ELSS) Public Provident Fund (PPF)
TypeMutual Fund
Vs
Bank Account/ Post Office Account
ObjectiveTo avail tax rebate under sec 80C of
Income Tax on deposits with capital
appreciation on investment
Vs
To avail tax rebate under sec 80C of
Income Tax on deposits with guaranteed
returns on investment
MeaningInvesment of fund is made in diversified
equity funds for long term which
generates capital appreciation.
Vs
A long-term saving instrument
established by the central government
which generates tax-free maturity to
provide the old-age income security
EligibilitySalaried employee, self-employed,
businessman, professional or any other
person can invest in it
Vs
Salaried employee, self-employed,
businessman, professional or any other
person can open it
Suitable forYoung investor who can take risk and aim
for a higher return (usually 15% p.a. or
more)
Vs
Risk averse investor who wants an
assured return
Investible amountAny amount. Minimum subscription amount
is declared by the fund house
Vs
Investments in smaller and unequal units
or in lump sum can be deposited to PPF
account
Maximum Investment Amount
No limit, however, the section 80C limit
(Rs. 1.5 Lakh p.a.) will be applicable
for claiming rebate
Vs
Rs 150,000 per year
Interest RatesMarket driven returns, one can expect
15% returns over a longer term period
Vs
Fixed- presently 8.1% p.a.
Interest Rates
Compounding
N.A.
Vs
Annually
Interest earned is
taxable
No
Vs
No
LiquidityNo
Vs
No
Tenure/ Lock-in Period3 Years
Vs
15 Years, can further be extended in
multiples of 5 years
Income Tax Rebate u/s 80CYes, upto Rs 1,50,000/- p.a.
Vs
Yes, upto Rs 1,50,000/- p.a.
MaturityTax Free
Vs
Tax Free
Premature WithdrawalsNot allowed
Vs
Can be withdrawn from 7th financial year
onwards from the opening of the account
and only one partial withdrawal is
allowed every financial year
LoansNo
Vs
Loan availibility from third year
onwards
Tax Deduction at SourceNo
Vs
No
RiskVolatile and risky iInvestment in short
term
Vs
Safest Investment