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Investment Plans 3600 views September 30, 2020
If you are looking for a low-risk investment, National Saving Certificate and Public Provident Fund would be the best options for you. You can enjoy tax deductions in both these investments. On the other hand, these investment plans can help you accumulate funds and multiply it through interest. But most individuals are confused between NSC vs PPF because both these investments are unique in their own way. But once you have understood the difference between these two investments, it would be easy for you to choose one plan. Let’s explore the major differences between a National Savings Certificate and Public Provident Fund.
Table of Contents
Difference Between NSC and PPF
In the table given below, you can see the major differences between these two investment plans. After exploring all the differences, you can easily choose a plan for yourself.
| Basic | National Saving Certificate | Public Provident Fund |
|---|---|---|
| Minimum Contribution | Rs.100 | Rs.500 |
| Maximum Contribution | No Upper Limit | Rs.1.5 Lacs |
| Denominations | Not Applicable | Not Applicable |
| Interest Compounding | Yearly | Yearly |
| Tax Benefits | Rs.1.5 Lac is the maximum tax benefit allowed under section 80Cof the Income Tax Act in this plan. The Interest received on this investment is taxable. | Rs.1.5 Lac is the maximum tax benefit allowed under Section 80C of the Income Tax Act in this plan. The Interest received on this investment is not taxable. |
| Tenure | 5 Years is the tenure in this investment plan and it cannot be extended. You will have to take the maturity amount and re-invest it in NSC. | 15 Years is the tenure for this investment plan and you can extend the tenure in a block of 5 years. |
| Additional Investment | You are not allowed to make an additional investment to the same account in this plan. | You are allowed to make an additional investment to the same account in this plan. |
| Minor Account | You can make an investment in the name of the minor regarding NSC. | You can have a separate minor account in case of a PPF investment. |
| Ownership | You can have joint ownership as well as single ownership in NSC. | Only a single holding is permissible in your PPF Account. |
| Loan | You are not allowed to mortgage NSC to the bank against a loan. | You can take a loan against your PPF investment between the 3rd and 6th financial years. |
Features of National Savings Certificate
- The minimum investment is available at Rs.100.
- There is no ceiling on the upper limit for NSC.
- The tenure of this scheme is five years.
- The rate of interest in this scheme remains the same throughout the tenure.
- You cannot take a loan against this investment plan.
- The interest received in NSC is taxable.
- Enjoy tax benefits of up to Rs.1.5 Lacs under Section 80C of the Income Tax Act.
Features of Public Provident Fund
- The minimum annual contribution for this the public provident fund is INR 500.
- You are allowed to invest a maximum of INR 1.5 lakhs annually in this scheme for enjoying tax benefits under Section 80 C of the Income Tax Act 1961.
- The interest from PPF is free of tax and the government keeps on changing it on a quarterly basis depending on the government.
- The tenure of the Public Provident Fund is 15 years that can be extended after maturity in a 5-year block as per your needs.
- You can hold the PPF Scheme in a single holding because there is no provision for joint holding.
- A nomination facility is available in this investment plan.
- You can also open an account in the name of the minor child.
- Loan available against your PPF account between the 3rd and 6th financial year.
- You can invest in the PPF Scheme either through a bank or a post office.
Conclusion
After exploring the difference between NSC vs PPF it would be easy for you to choose an investment. If you find both of these investments amazing then you can invest in both of them. There is no such rule that you can’t invest in PPF and NSC together. Therefore, in order to grow your wealth and multiply your funds, you can invest in both the schemes. The ball is in your court and you will have to decide the best investment plan between National Savings Certificate and Public Provident Fund for yourself.