National Savings Certificate vs Public Provident Fund

National Savings Certificate (NSC)	Public Provident Fund (PPF)
Interest Paid: 8%, compounded half-yearly	Interest Paid: 8%, compounded annually
No monthly/yearly payments	No monthly/yearly payments
Minimum investment: Rs 100 Maximum investment: No Limit	Minimum investment: Rs 500 (required annually) Maximum investment: Rs 70,000
Duration of investment: 6 years	Duration of investment: 15 years
Can be used as a security for mortgage and other purposes	Cannot be used for such purposes
Tax benefit under Section 80 ‘C’ available. Maximum limit: Rs 100,000	Tax benefit under Section 80 ‘C’ available. Maximum limit: Rs 70,000 (limit of the investment in PPF)
Good medium-term investment option	Good long-term investment option
Interest if fully Taxable	Interest is fully Exempt

i want to add here that------

1. The NSC is a post-office savings scheme while the PPF was established by the central government in 1968. But both are very safe since they are backed by the government.However, NSC is sold in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000. So, if you want to invest Rs 30,000, you will have to buy three certificates of Rs 10,000 each.

2. While NSC requires one time investment, PPF requires regular investment.

3. NSC is the form of a certificate but PPF is in the form of an account and to keep it active, you’ve to make regular investment – a minimum amount of Rs 500 has to be deposited every year to keep the account active.

4. Once you invest in a NSC the interest rate gets locked-in i.e., can’t be changed subsequently, where as in case of PPF the returns are assured but not fixed. In other words, depending upon the interest rate scenario, government can move it either downward or upward, as the economic situation demands.However, as the interest to your PPF account gets credited every year, the change in interest rate is always prospective and not retrospective.

As regards the uncertainty associated with the PPF interest rate, we can observe that since 2003, there has not been any change in the PPF interest rates. Even if there is a change in near future, in my view, it can’t go beyond +/- 1%.

With REGARDS