National Savings Certificate (NSC) and Public Provident Fund (PPF) are popular investment schemes offered by the Government of India. Both schemes provide individuals with opportunities for long-term savings and offer various benefits. In this article, we will compare NSC and PPF based on different parameters to help investors make an informed decision.
Purpose and Eligibility:
NSC: NSC aims to encourage individuals to save money while providing a safe and secure investment option. It is available to Indian citizens, both adults and minors.
PPF: PPF is designed to facilitate long-term savings and retirement planning. It is open to Indian residents and can be opened by individuals or on behalf of minors.
NSC: NSCs have fixed maturity period of five years.
PPF: PPF accounts have a lock-in period of 15 years, which can be extended in blocks of five years after maturity.
NSC: The interest rate for NSCs is fixed by the government and currently stands at 7.7% compounded annually, payable at maturity.
PPF: The interest rate for PPF is also determined by the government and is currently 7.1% compounded annually. The interest is credited annually and is tax-free.
NSC: Investments in NSC are eligible for tax deductions under Section 80C of the Income Tax Act, up to a specified limit. However, the interest earned on NSCs is taxable.
PPF: Contributions to PPF accounts qualify for tax deductions under Section 80C, and the interest earned and maturity amount are tax-free. PPF offers greater tax benefits compared to NSC.
NSC: NSCs cannot be prematurely closed before five years, except in cases of the account holder’s death, forfeiture by a pledgee who is a Gazetted officer, or by court order.
PPF: Partial withdrawals from PPF accounts are allowed from the seventh year, subject to certain conditions. Complete withdrawals can be made only after the completion of the 15-year lock-in period.
NSC: There is no maximum investment limit for NSCs. The minimum investment amount is typically set at Rs. 1000, and multiple of 100.
PPF: The minimum annual investment amount for PPF is Rs. 500, and the maximum limit is Rs. 1.5 lakh per financial year.
NSC: NSCs can be purchased directly from designated post offices across India, making them easily accessible to investors.
PPF: PPF accounts can be opened at post offices and authorized banks, providing individuals with multiple options for account opening.
Both NSC and PPF offer attractive investment options with different features and benefits. NSC provides a fixed interest rate and flexibility in investment tenures, while PPF offers tax benefits and a long-term savings approach. Investors should consider their financial goals, risk tolerance, and liquidity requirements before choosing between NSC and PPF. It is advisable to consult with a financial advisor or conduct further research to make an informed investment decision.