₹10 lakh in PPF vs ₹10 lakh in NSC: How do maturity periods, returns and income tax benefits compare for investors? — SkimNews
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- PPF currently offers 7.1% annual interest but limits contributions to ₹1.5 lakh per year, so an investor targeting ₹10 lakh must spread deposits across multiple financial years.
- PPF matures 15 years from the end of the financial year in which the account was opened; it can be extended in five-year blocks, with or without further contributions, and also allows partial withdrawals and loans subject to rules.
- NSC allows a ₹10 lakh lump-sum investment, offers 7.7% interest for October–December 2026 and keeps that rate fixed throughout its five-year tenure.
- NSC has an estimated five-year maturity value of approximately ₹14.49 lakh on a ₹10 lakh investment at 7.7%, including ₹4.49 lakh of interest before tax.
- PPF offers Section 80C-deductible contributions and completely tax-free accumulated interest and maturity proceeds under its EEE status.
- NSC treats earned interest as taxable under the investor’s applicable income-tax slab; interest accrued in the first four years can be reinvested for Section 80C deductions within the ₹1.5 lakh annual limit, while fifth-year interest cannot be reinvested for another deduction.
- Section 80C deductions for both schemes are available only under the old income tax regime, not the new regime.
Why it matters: An investor with ₹10 lakh and a five-year horizon gains the NSC’s 7.7% fixed rate and estimated ₹14.49 lakh maturity value, but must budget tax on the ₹4.49 lakh interest. PPF instead offers tax-free maturity proceeds and a 15-year wait; its Section 80C deduction is available only under the old income-tax regime.
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