Elss

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Tanvi (Querist)
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22 December 2011 Is it better to choose ELSS over PPF for 80C deduction? taking in concern that stock markets are not going good....and whether return on ELSS is taxable?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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22 December 2011 ELSS has a Lock-in-Period of 3 years. So return treated as long term capital gain and therefore Tax Exempted. PPF return is also Tax Exempted.

Lock-in-Period is 3 years compared to 15 years in PPF.

Now interest of PPF has also increased from 8% to 8.6%.

Regarding Market condition, look it can not get more worse than it already is. If anything this is the time to invest. Market is going through a bad phase and is expected to recover in near future. But PPF is always a safe bet. Equity oriented investment will always have greater risk compared to fixed investment plans like PPF. But then it can also give more return.

So in my view you can invest in ELSS simply for following reasons--

1) Lock-in-Period is 3 years only.
2) Tax Exempted being LTCG.
3) Index is very low at present and can only improve from here.

Regards.

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