Who decides on the PPF interest rate

What is the difference between PPF and NSC savings plans?

PPF and NSC can be roughly compared as follows;

PPF is a public pension system with an initial term of 15 years and can be extended by 5 years. For fiscal year 2014-15, there is a minimum investment of Rs 500 per year and a maximum investment of Rs 1.50,000 per year. The profits from PPF are also exempt from any capital gains tax.

NSC is like a fixed deposit for a period of 6 years. They can be bought from the post office in multiples of Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000 & Rs. 10,000. There is no maximum purchase limit, however the tax refund is only Rs 1.50,000 for the 2014-15 fiscal year.

Interest Rate: Both currently offer an interest rate of 8.75%. With PPF, the interest rate is given every year and applies to the entire invested corpus. In the case of NSC, interest is fixed for the life of the investment, changes in interest apply to next investments. The interest will be increased

Account operation:

  • The PPF can be opened in any nationalized bank. It is supplied with a passbook in which the deposits and interest (and any withdrawals) are recorded.
  • The NSC certificates are purchased from the post office. These certificates must be kept in a safe place, as they cannot be revoked without submitting them.

Payouts: With PPF, the first payout is possible in the 7 years, with a balance of 50% in the 4th year and also in the following years. There is no early payout in NSC, but you can get a loan from banks by mortgaging the certificates.

Tax benefits: Both PPF and NSC enjoy tax benefits below 80 ° C. However, the PPF follows a so-called EEE regime, in which the investment is tax exempt, the accrued interest is tax exempt and the redemption is also tax exempt is. However, the NSC is only tax-exempt on the investment, the interest earned must be reported as income and would be treated as invested. Withdrawal, the interest would be taxed accordingly.

The best benefit of having a PPF account cannot be claimed in court if there is financial liability. IE the money in the PPF account can only be used by you.

Therefore, it would make more sense to invest in PPF