The best way to optimize your returns is to plan how to invest in both these schemes, dividing investments between the two for tax benefits, and achieving your financial goals. If you are interested in a long-term financial goal, use PPF which can be extended beyond 15 years in blocks of 5 years. If you open an account for your minor child, they can either withdraw the proceeds or continue the account for as long as they like.
With tax benefits, stable returns and loan facilities, use either one scheme or both, and fulfill your financial goals! With a shorter lock-in period of 5 years and a fixed rate of interest, NSC can be used to fund short-term goals like a foreign trip or down payment for your car.
For longer-term goals like higher education of your child or marriage, you can use PPF which has a year lock-in period, avail loan facilities and can be extended in blocks of 5 years. Besides, it comes under the exempt-exempt-exempt category where the contribution, the interest, and the maturity value are tax-free.
You can use NSC to pay for your short-term financial goals and use PPF to realize your long-term financial goals more than ten years. However, you need to keep in mind that the deductions under Section 80 C have an upper limit of Rs. You could divide the investments between the two schemes. You will also be eligible for loans from both these schemes. For PPF, loans can be availed off between the 3rd and the 6th financial year. This will help you overcome a temporary fund crisis.
While NSC is of a shorter duration, there is no flexibility of extension. Hence, if you want to invest for a 5-year period and need the safety of principal and interest, go for NSC. On the other hand, even though PPF has a longer lock-in period, you or your children can extend it beyond 15 years and use it for a longer goal like retirement. It has greater tax benefits compared to NSC and would be more beneficial for those in the higher tax bracket.
PPF Scheme Here are the main highlights of this scheme. This is a government backed small savings scheme. You need as little as Rs. The minimum annual contribution for this scheme is also Rs. You can invest a maximum of Rs. The interest from PPF is tax-free and keeps changing on a quarterly basis depending on the government security yield. The current rate is 7. It is compounded annually. The tenure of the scheme is 15 years which can be extended post maturity in a five-year block as long as you wish.
This is an exempt-exempt-exempt scheme which means the annual contribution, the accumulated interest, and the maturity amount is tax-free. If you are in the higher tax slabs, it means higher tax savings. You can hold this scheme in a single holding as there is no provision for joint holding.
However, there is a nomination facility available. An account in the name of your minor child can also be opened; however, the total benefit under Section 80 C of the Income Tax Act is limited to Rs. Loans can be taken against your PPF account between the 3rd and 6th financial year. You can invest in this scheme either through a bank or a post office. NSC Scheme This is a small-savings scheme supported by the government.
Here are the main highlights of this scheme. Starting this scheme is extremely simple, and the minimum investment is at Rs. Healthy snacking while working from home is beneficial for your health. Top News China's Singles' Day loses lustre as growth slumps to single digit amid crackdown. Covaxin interim data shows it is Investing in commercial real estate: Pros and cons, tax implications explained. Sensex snaps 3-day losing streak, ends near day's high; Nifty above will aim for Why employees in the west are quitting their job and how work trends have evolved in India post-pandemic slowdown.
Ombudsman scheme to provide cost-free redress of customer complaints: RBI. Bank Ltd. Select State. Select City. Select Branch. To let users save for the future, there are a number of private and government schemes available. The private schemes are generally offered by banks and NBFCs that involve the ease to create fixed deposits, recurring deposits, mutual funds, investing in SIP, etc.
Table of content-. The comparison between them will let users know the right option to invest for the future! Though both NSC and PPF are considered great options to save for the future; however, they still have their set of features that make them different from each other.
NSC is a scheme initiated by the Government of India. It can be opened by the applicant through any post office branch.
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