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₹10 lakh in PPF vs ₹10 lakh in NSC: How do maturity periods, returns and income tax benefits compare for investors?
Mint 4 hrs ago·8 Nov 2026, 6:51 am
The Public Provident Fund (PPF) and National Savings Certificate (NSC) are both government-backed small savings schemes that offer tax benefits under Section 80C. However, they differ significantly in how they generate returns and when you can access your money. The PPF is a long-term investment with a 15-year lock-in period, while the NSC has a fixed 5-year tenure. The PPF offers compound interest, which helps your money grow faster over time compared to the simple interest earned on an NSC.
For investors, the key difference lies in the taxability of the interest earned. The interest on a PPF is tax-free, whereas the interest on an NSC is taxable as 'income from other sources' in the year it is credited. This means an NSC investment does not provide a tax shield in the year of investment, though the maturity amount is tax-free. Investors looking for a steady income stream might prefer the NSC, while those prioritizing long-term wealth creation and tax-free interest should consider the PPF.
To choose between the two, you must weigh your investment horizon and tax planning needs. If you can commit funds for 15 years, the PPF is generally more advantageous due to its compounding effect and tax-free interest. If you need a lump sum in 5 years and want to save tax on the interest income, the NSC is a suitable option. Ultimately, the right choice depends on your specific financial goals and liquidity requirements.
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