Explore NSC vs PPF to see how each scheme offers unique benefits in terms of returns, safety, tax savings, and tenure, helping you plan your investments wisely.
When it comes to secure and reliable investment options in India, the Public Provident Fund (PPF) and the National Savings Certificate (NSC) are two of the most popular choices. Both of these schemes are backed by the government, making them low-risk investment options. However, they cater to different financial goals and have distinct features. In this article, we'll explore the key differences between PPF and NSC, helping you make an informed decision about where to invest your money.
The Public Provident Fund (PPF) is a long-term savings scheme introduced by the Government of India to encourage individuals to save for their retirement. It offers attractive interest rates, tax benefits, and government-backed security, making it one of the most favored investment options for risk-averse investors.
The National Savings Certificate (NSC) is another popular savings scheme backed by the Government of India. It is a fixed-income investment scheme that primarily targets small to mid-income investors looking for a safe investment option with moderate returns.
Parameter |
PPF |
NSC |
Investment tenure |
As a long-term savings vehicle, PPF has a mandatory lock-in period of 15 years. |
NSC has an investment tenure of 5 years. |
Interest rates |
PPF interest rates are revised and declared by the Indian government quarterly. PPF interest rate is 7.1% for Q2 (2024-25). |
NSC interest rates are fixed for the investment tenure at the prevailing rates on the day you buy the certificate. However, the government revises rates on a quarterly basis. Currently, the NSC interest rate is set at 7.7% p.a.
|
Minimum investment amount |
The minimum investment amount is Rs. 500. |
The minimum investment amount is Rs. 1000. |
Maximum investment amount |
The maximum amount you can invest in PPF in a financial year is Rs. 1.5 lakhs. |
There is no maximum investment limit for NSC. |
Tax benefits |
PPF is an EEE scheme. The invested amount is tax-exempted up to Rs. 1.5 lakhs u/s 80(C). The interest earnings and maturity corpus are also tax-exempt. |
NSC is an EET scheme. The principal invested qualifies for 80(C) deductions as per the maximum ceiling. Interest earned in the first 4 years qualifies for 80(C) deductions on account of being reinvested into the scheme. However, interest earnings in the 5th year are taxable as per the applicable income tax slab of the investor. |
Premature withdrawals |
PPF permits partial withdrawals of up to 50% and premature withdrawals after the completion of 5 years. One partial withdrawal is permitted every year. |
No premature withdrawal is permitted before the completion of the 5-year term. Premature withdrawals may be permitted in special cases like the death of the certificate holder or when mandated by a court order. |
Choosing between PPF and NSC depends on your financial goals, investment horizon, and risk appetite. Here’s a simple guide to help you decide:
Both PPF and NSC are excellent investment options for those looking for secure, low-risk avenues to grow their savings. While PPF is better suited for long-term investments with tax-free returns, NSC offers slightly higher returns over a shorter period with more flexibility in investment amounts. Ultimately, the choice between PPF and NSC depends on your financial objectives, time horizon, and tax considerations. By understanding the key differences between these two schemes, you can make a well-informed decision that aligns with your financial goals and helps you achieve long-term financial security.
NSC suits investors seeking fixed returns with a shorter lock-in, while PPF is better for long-term, tax-efficient wealth creation. PPF offers tax-free maturity and higher safety over time, whereas NSC provides assured returns but with taxable interest at maturity.
Any Indian resident individual can open an NSC account at a post office. PPF accounts can be opened by resident individuals for themselves or on behalf of minors. NRIs cannot open new PPF accounts but can hold existing ones until maturity.
Both NSC and PPF qualify for tax deductions under Section 80C. However, PPF offers EEE status—investment, interest, and maturity are tax-free—while NSC interest is taxable, though deemed reinvested and eligible for 80C deduction during the tenure.
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For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.
