Equity Linked Savings Scheme vs Public Provident Fund
Difference between Equity Linked Savings Scheme and Rajiv Gandhi Equity Savings Scheme
| Basis of Difference | Equity Linked Savings Scheme (ELSS) | Public Provident Fund (PPF) | |
|---|---|---|---|
| Type | Mutual Fund | Vs | Bank Account/ Post Office Account |
| Objective | To 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 |
| Meaning | Invesment 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 |
| Eligibility | Salaried 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 for | Young 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 amount | Any 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 Rates | Market 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 |
| Liquidity | No | Vs | No |
| Tenure/ Lock-in Period | 3 Years | Vs | 15 Years, can further be extended in multiples of 5 years |
| Income Tax Rebate u/s 80C | Yes, upto Rs 1,50,000/- p.a. | Vs | Yes, upto Rs 1,50,000/- p.a. |
| Maturity | Tax Free | Vs | Tax Free |
| Premature Withdrawals | Not allowed | Vs | Can be withdrawn from 7th financial year onwards from the opening of the account and only one partial withdrawal is allowed every financial year |
| Loans | No | Vs | Loan availibility from third year onwards |
| Tax Deduction at Source | No | Vs | No |
| Risk | Volatile and risky iInvestment in short term | Vs | Safest Investment |