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PPF is a long- term savings investment options established by the Govt. of India in 1968. It offers tax benefits on withdrawal as well as on contributions.
Mutual Funds-ELSS (Equity Linked Saving Scheme is similar to PPF in terms of tax implications(both enjoys the benefit of 80C). However, the average returns in ELSS in much higher (3 years returns-14- 16%) when compared with PPF.
Safe Investors can also invest in Debt / Liquid / Short Term Mutual Funds.Debt funds allow indexation benefits (tax is lowered taking inflation into consideration) if you hold them for a period of 3 years.
| Factors | PPF | ELSS | Debt-Short Term Funds |
|---|---|---|---|
| Returns | 8% | 14-16% | 8.5-9.5% |
| Lockin Period | 15 years | 3 Years | NIL |
| Tax Applicable | No Tax | No Tax | Short term and Long Term Capital gain tax with indexation benifit |
| Financial Year | Interest Rate(p.a) |
|---|---|
| 2017-2018 | 7.9% |
| 2016-2017 | 8.1% |
| 2013-2016 | 8.7% |
| 2012-2013 | 8.8% |
| 2011-2012 | 8.6% |
| 003-2011 | 8% |
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