NPS vs PPF: Everyone’s heart sinks thinking about retirement. This is because after retirement, the source of income ends, and you will not be able to fulfill your needs. If you want that life to go on without any tension after retirement, and you do not have to beg for money from anyone. If you are creating a source of income every month, then in this article, we are going to tell you about an investment option.
We are talking about popular schemes like PPF and NPS. Both these schemes are very popular among employed people. Everyone can invest in the government’s PPF scheme. This is a voluntary scheme. At the same time, anyone can also invest in the NPS scheme. But before investing, definitely know about the difference between the two schemes.
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National Pension System
Talking about the National Pension System, i.e., NPS, this scheme has been designed keeping in mind the financial needs. In this scheme, the fund received on maturity is 60 percent. There is no tax on the investment amount in the NPS scheme. The remaining 40 percent amount is received as an annuity. Let us tell you that the insurance company gives a pension for life from the annuity money. There is no tax on the pension received.
Public Provident Fund
For information, if your monthly income is good, then you can invest up to a maximum of Rs 1.5 lakh annually in the PPF scheme. The investment amount in PPF is tax-deductible under Section 80C. There is no tax on the amount and interest received on maturity in this scheme. Maturity is available in 15 years in PPF. At the same time, you can take advantage of the pre-maturity option after 7 years. After investing for 15 years, you can extend the period in blocks of 5 years each. 7.1 percent interest is being received on the amount invested in the PPF scheme. Along with this, compound interest is also being received.
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What is the difference between PPF and NPS?
Let us tell you that the return received in PPF is not fixed. But the fund received depends on the return received from investment in equity and debt. The reason for this is that an annuity is a contract between you and the insurance company. As per the contract between the insurance company, it is very important to take at least 40 percent of the money in NPS as annuity. The more this amount increases, the higher the pension will be. The money invested in an annuity is received as a pension after retirement. One special thing about NPS is that its remaining amount can be withdrawn together.