NPS vs PPF: Which One is Best for Investment

NPS and PPF are popular investment options offering tax benefits, long-term savings, secure returns, and retirement planning opportunities.
OPEN FD
NPS vs PPF
OPEN FD
4 mins
25-August-2025

When it comes to building wealth for the future, two schemes often stand out—National Pension Scheme (NPS) and Public Provident Fund (PPF). Both are backed by the government, but they serve different needs. NPS is retirement-focused and market-driven, while PPF is safer, offering fixed returns with a 15-year lock-in. To make the right choice, you need to understand how each works—and where an FD can also fit into your financial plan.

What is NPS?

The National Pension Scheme (NPS) is a retirement savings initiative regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows individuals from the public, private, and unorganised sectors (except armed forces) to build a pension fund during their working years.

Key features of NPS:

  • Market-linked investment for long-term growth

  • Tier-I (mandatory) and Tier-II (voluntary) accounts

  • Partial withdrawals allowed after 3 years for specific needs

  • Tax benefits under Section 80C and Section 80CCD (1B)

If you’re looking for safer diversification, consider Bajaj Finance FD alongside your NPS. It offers up to 7.30% p.a. guaranteed returns, unlike NPS, where returns depend on market performance. Open FD.

Who can invest in NPS?

Any Indian citizen between 18 and 70 years can open an NPS account, provided they meet KYC requirements and are not declared insolvent or of unsound mind.

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

What is PPF?

The Public Provident Fund (PPF) was introduced in 1968 as a government-backed savings and tax-saving tool. It is popular among risk-averse investors looking for stable, long-term returns.

Key features of PPF:

  • Minimum investment: Rs. 500 per year

  • Maximum investment: Rs. 1.5 lakh per year

  • Tenure: 15 years (extendable in blocks of 5 years)

  • Current interest rate: 7.1% p.a. (compounded annually)

Unlike PPF’s long lock-in, a Bajaj Finance FD gives you flexible tenures ranging from 12 to 60 months, making it easier to align with short- and medium-term goals. Check rates.

Who can invest in PPF?

Any Indian citizen can open a PPF account. One person can hold only one account, except when opening an additional account for a minor. NRIs and Hindu Undivided Families (HUFs) are not eligible.

Also Read: How to Change/Reset UAN password

NPS and PPF: Key differences

1. Safety

  • NPS: Market-linked, so returns vary, but regulated by PFRDA.

  • PPF: Backed by the government, offering guaranteed fixed returns.

If capital safety is your top priority, FDs are a strong choice. With AAA-rated safety by CRISIL and ICRA, Bajaj Finance FDs ensure security along with assured returns. Check eligibility and invest now!

2. Liquidity

  • NPS: Partial withdrawals allowed after 3 years for specific needs.

  • PPF: Partial withdrawals allowed from the 7th year; loan facility available from 3rd to 6th year.

3. Taxation

  • PPF: Contributions qualify for tax deduction under Section 80C. Interest and maturity amount are tax-free (EEE category).

  • NPS: Contributions eligible for tax deductions under Section 80C and 80CCD (1B). Upon maturity, 40% withdrawal is tax-free, while 40% must go into an annuity (taxable).

Bajaj Finance FD doesn’t have a tax-saving variant, but it offers assured post-tax earnings with higher flexibility, making it a practical add-on to your tax-efficient instruments. Open an FD with just Rs. 15,000.

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
Recommended

Fixed Deposit - 60 Months

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Age below 60

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Minor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - HUF

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
6.95% p.a.
Open FD

NPS vs PPF vs Bajaj Finance FD

Parameter

NPS

PPF

Bajaj Finance FD

Maturity

At 60 years

15 years (extendable)

12–60 months

Interest

9–12% (market-linked)

7.1% p.a. (fixed)

Up to 7.30% p.a. (guaranteed)

Minimum Investment

Rs. 1,000

Rs. 500

Rs. 15,000

Maximum Investment

No upper limit

Rs. 1.5 lakh per year

Up to Rs. 3 crore

 

Conclusion

Both NPS and PPF are excellent for long-term wealth creation, but they serve different purposes—NPS is retirement-focused and market-driven, while PPF is safer with fixed returns. However, if you want a balance of safety, flexibility, and assured earnings, adding a Bajaj Finance FD to your portfolio can be the smart move. It gives you shorter lock-ins, guaranteed growth, and higher liquidity—helping you achieve both short- and long-term financial goals. Open FD.

 

Calculate your expected investment returns with the help of our investment calculators

Investment Calculator

FD Calculator

SSY Calculator

PPF Calculator

RD Calculator

Provident Fund Calculator

Gratuity Calculator

Frequently asked questions

Can I take both NPS and PPF?

Investing in both the National Pension Scheme (NPS) and the Public Provident Fund (PPF) can help you claim a maximum deduction of Rs 1.5 lakh under Section 80C of the Income Tax Act. Additionally, NPS offers extra tax benefits beyond Section 80C.

Which is better for retirement planning, NPS or PPF?

NPS may be better for those seeking higher returns and willing to take moderate risks, as it invests in equities and debt. PPF is ideal for risk-averse individuals preferring a fixed return. The choice depends on your risk tolerance and financial goals.

Is a Bajaj Finance FD safer than NPS and PPF?

Yes, Bajaj Finance FDs are rated AAA by CRISIL and ICRA, ensuring the highest level of safety for your money. While NPS and PPF are government-backed, FD offers guaranteed returns without market risks. Check rates offered by Bajaj Finance on FDs and invest now!

Videos on Fixed Deposit

Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.