How is ELSS different from other tax saving options like PPF & NSC?

How is ELSS different from other tax saving options like PPF & NSC?

ELSS is different from other tax saving investments in many ways. While most of them are debt instruments, ELSS is equity based. It has a relatively lower lock-in than schemes like PPF, NPS, etc. However, being market linked, it takes on more risk to provide higher returns than other products. Below is a table to demonstrate the differences between PPF, NSC & ELSS.

Parameter

PPF

NSC

ELSS

Tenure

15 years

6 years

3 years

Returns

(Compounded Annually)
8.80 % ^

(Compounded
half-yearly)
8.60 to 8.90 % ^

Not assured dividends/ returns

(Indicated 12-16%)

Minimum investments

Rs.500

Rs.100

Rs.500

Maximum investments

Rs.100,000

No limit*

No limit*

Amount eligible for
deduction under Section 80C

Rs.150,000

Rs 1,50,000

Rs 1,50,000

Taxation for interest

Tax free

Taxable

Dividends and capital gain tax free

Risk

NIL

NIL

High

 


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