NPS vs PPF: Which is better for retirement, choose the right option after understanding the details..

Public Provident Fund (PPF) and National Pension System (NPS) are very popular among investors who want to invest for retirement. To decide which of the two schemes is better for whom, both the schemes have to be compared. For comparison, we must understand all the features of PPF and NPS well.

What is the specialty of NPS?
The National Pension System (NPS) is a pension scheme introduced by the government, which invests in fixed-return assets as well as equity. This is the reason why investors have the scope to get better returns in it. Long-term investment through NPS can give higher returns than the stock market.

This is the reason why it is considered a better scheme in terms of creating a retirement corpus in the long term, with the help of which a good amount can be obtained as a pension after retirement. Also, investing in NPS provides income tax benefits.

The special thing is that NPS has been designed to provide pension security to workers of both organized and unorganized sectors of the economy. All people between 18 and 70 years can invest in it. This scheme not only provides financial security after retirement, but through this, you can also take advantage of capital appreciation on your investment.

Being a scheme run to provide pensions to investors, a large part of the money invested in it can usually be withdrawn only after retirement. Whereas at the time of maturity, a part of the corpus is required to buy an annuity for pension. Withdrawal of money deposited in the scheme before maturity is allowed only under certain circumstances and conditions.

NPS offers the highest tax exemption
Investing up to Rs 1.5 lakh in NPS during a financial year provides tax benefits under Section 80C of the Income Tax Act. Apart from this, it is the only scheme in which even after Rs 1.5 lakh, additional investment of up to Rs 50,000 in a year is exempted under section 80CCD (1B).

In this way, tax benefits are available on investing up to Rs 2 lakh in NPS during a business year. Such exemption is not available in any other scheme. All these exemptions are available only on investments made in the Tier 1 account of NPS.

What is the specialty of PPF?
Public Provident Fund i.e. PPF is also a scheme introduced by the government. The money deposited in it gives fixed and guaranteed returns according to the interest rate declared by the government. The maturity of PPF is 15 years. Due to such a long lock-in period, PPF is a good scheme for regular investment for a long time. Currently, interest is being given on PPF at an annual rate of 7.1 percent. Due to the guaranteed return, it is considered a good investment option for those who do not want to take any risk on their investment.

To keep the PPF account active, it is necessary to deposit a minimum of Rs 500 every year. Money can be deposited in a PPF account up to 12 times during a year. This account matures in 15 years, but after depositing money continuously for 5 years, there is a relaxation to withdraw money for certain purposes like children's education, marriage, and medical emergencies. A maximum of Rs 1.5 lakh can be deposited in a PPF account during a business year, on which tax benefits are available under Section 80C of the Income Tax Act.

What is better for you in NPS and PPF To understand what is better for you in NPS and PPF, you have to look at the special features of both the schemes. Risk-free guaranteed return is the biggest feature of PPF, but the interest received on it is not very attractive. Despite this, by investing regularly over a long period, you can create a large retirement fund through it.

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