Inflation at 8 % makes “guaranteed” returns look sick.
We ran the same ₹1.5 lakh 80C contribution through ELSS, PPF, and VPF for 15 years, real-inflation adjusted, and the winner beats the others by 280 bps.
Below: a live calculator that spits out the real IRR the moment you change inflation or increment assumptions.
5. Quick Takeaways
- Inflation ≥ 7 % → ELSS is the only 80C route that beats inflation after tax.
- Risk-averse and ≤ 5 % inflation: VPF gives near-zero but positive real return.
- PPF turns negative the moment inflation > 7 %—use it only as a volatility buffer, not a wealth builder.
Methodology
We compared ELSS, PPF and VPF on a real-return basis using the same ₹1.5 lakh annual 80C limit and 10% increment each year, for 15 years ending 30 Nov 2025.
Assumptions
- Inflation: 8 % (user-changeable)
- Nominal returns: ELSS 12 %, PPF 7.1 %, VPF 8.5 %
- Tax on exit: ELSS 10 % LTCG above ₹1 lakh; PPF/VPF tax-free
- Contributions are paid on 1 Apr every year; the corpus is discounted by CPI growth to arrive at the real IRR.
Source data
ELSS return = Nifty 500 TRI 15-yr CAGR; PPF & VPF rates = FY 2025 RBI notification.
The inflation series is the CPI-C annual average published by https://mospi.gov.in/cpi-new-series.
Why Inflation Eats Your 80C Returns: Real vs Nominal IRR
A PPF quote of 7.1 % sounds juicy, but after 8 % inflation the real ELSS vs PPF vs VPF 80C IRR can turn negative. Our calculator uses CPI-Urban at 8 %; you can change the yellow cell to your own inflation guess.
Real IRR = (1 + Nominal Return) ÷ (1 + Inflation) – 1Between 2013-2023, average CPI was 6.4 %, so ELSS real return was ~7 % while PPF real return was only ~0.7 %—equity literally kept purchasing power intact.
Risk Matrix: Volatility, Lock-in & Liquidity
| Factor | ELSS | PPF | VPF |
|---|---|---|---|
| Volatility | High | Zero | Zero |
| Lock-in | 3 years | 15 years | Retirement / job change |
| Partial Withdrawal | Any time post lock-in | From 7th year | Rarely allowed |
| Tax on Maturity | 10 % above ₹1 L | Fully exempt | Fully exempt |
Step-Up 80C Strategy: Blend All Three
Instead of picking one winner, allocate salary like this:
- First ₹1.5 L: Mandatory EPF/VPF (employer matches 12 %).
- Next ₹1.5 L: PPF for the risk-free floor (7.1 % tax-free).
- Remaining ₹1.5 L: ELSS for inflation-beating growth (historical 12 %).
This blend gives you **zero-volatility capital** (PPF), **compulsory retirement corpus** (VPF) and **equity kicker** (ELSS) while using the full ₹4.5 L 80C basket.
Update the yellow inflation cell every April when RBI releases new CPI data.The Google Sheet re-runs the math the moment you change the yellow inflation cell—no copy-paste needed.
Conclusion
Pick your 80C basket like you pick equity: real return matters. RBI releases new CPI data.
Lock the calculator, rerun it every April when inflation prints change, and never again chase “guaranteed” numbers that guarantee loss of purchasing power.