Public Provident Fund (PPF), National Savings Certificates (NSC) Compared


The Department of Posts or India Post offers various small saving schemes which guarantee attractive interest rates. Among the nine saving schemes offered by India post, 15-year Public Provident Fund (PPF) account and the National Savings Certificates (NSC) are quite popular. NSC is especially designed by India Post to cater to government employees, businessmen and other salaried classes who are income tax assesses.  PPF is popular because of its EEE – exempt, exempt, exempt – status in terms of income tax treatment. Both PPF and NSC deposits are eligible for deduction under Section 80C of the Income Tax Act.

(Also Read: Latest Interest Rates On Post Office Saving Schemes: PPF Vs NSC Vs Recurring Deposit)

Given below are features, interest rates that India Post offers on PPF, NSC:

Features of Public Provident Fund (PPF) Account:
1. PPF deposits can be made in lump-sum or in 12 instalments, said India Post on its website

(Also Read: Want To Earn A Regular Monthly Income? 5 Investment Options For You)

2. A joint PPF account cannot be opened.

3. A PPF account can be opened by cash/ cheque. In case of a cheque, the date of realisation of ccheque in government account shall be the date of opening of the account, India Post said.

4. A nomination facility is available at the time of opening of PPF and also after opening of the account. A PPF account can be transferred from one post office to another.

5. A subscriber can open another PPF account in the name of minors but subject to the maximum investment limit by adding balance in all accounts.

(Also Read: Post Office Savings Schemes That Offer Income Tax Benefits)

6. The maturity period of PPF accounts is 15 years but the same can be extended within one year of maturity for further five years and so on.

7. The maturity value of PPF can be retained without extension and without further deposits also.

8. Premature closure of a PPF account is not allowed before 15 years.

9. Deposits qualify for deduction from income under Section 80C of the Income Tax Act.

10. Interest on PPF is completely tax-free.

(Also Read: Nine Investment Schemes You Should Know)

11. Withdrawal from PPF is permissible every year from the seventh financial year from the year of opening account.

12. A loan facility is available on PPF accounts from the third financial year.

13. No attachment of the PPF account happens under a court decree order.

14. The PPF account can be opened in a Post Office which is double-handed and above, said India Post.

Features of National Savings Certificates (NSC):
1. The NSC scheme is especially designed for government employees, businessmen and other salaried classes who are income tax assesses, said India Post.

2. There is no maximum limit for investment in NSC.

3. There is no tax deduction at source.

4. The certificates can be kept as a collateral security to get loans from banks.

5. Trusts and hindu undivided families or HUF cannot invest in NSCs.

6. Investors can buy NSCs every month for five years and re-invest the money on maturity. On retirement, as the NSC matures, it will fetch a monthly pension.

7. A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.

8. NSC deposits qualify for tax rebate under Section 80C of Income Tax Act.

9. The interest accrues annually but is deemed to be reinvested under Section 80C of Income Tax Act.

10. In case of NSC VIII and IX issue, transfer of certificates from one person to another can be done only once from the date of issue to the date of maturity. At the time of transfer of certificates from one person to another, old certificates will not be discharged. The name of old holder will be rounded and the name of new holder will be written on the old certificate and on the purchase application (in case of non-CBS Post offices) under dated signatures of the authorized postmaster along with his designation stamp and date stamp of post office. Core Banking Solution or CBS enables customers to operate their accounts and avail account related services from any post office in the country.

Interest rate on PPF accounts:
From 1.01.2018, PPF accounts will fetch 7.6% interest per annum (compounded yearly).

Interest rate on NSC:
From 1.01.2018, interest rates on NSC are as follows:-
7.6 per cent interest rate compounded annually but payable at maturity.
An amount of Rs 100 invested in NSC grows to Rs 144.23after five years, said India Post.

Minimum amount for opening of PPF account and the maximum balance that can be retained:
A minimum of Rs 500 is required for opening a PPF account and a maximum of Rs 1,50,000 can be retained in a financial year.

Minimum Amount for opening of NSC and the maximum balance that can be retained:
A minimum of Rs.100 and in multiples of Rs 100 is required to be invested in NSC.
There is no maximum limit that can be retained.

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