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PPF vs NSC: Which ₹5 Lakh Investment Earns More?
PPF and NSC are government-backed savings schemes.
In the example, both start with ₹5 lakh and are compared over five years.
NSC has the higher interest rate of 7.7%, while PPF offers 7.1%.
Before taxes, NSC grows to about ₹7,24,520.
PPF grows to about ₹7,04,560 in the illustration.
However, NSC interest is taxable, while PPF interest is tax-free.
NSC lasts five years and locks in its rate for that certificate.
PPF is designed for 15 years and can support longer-term saving, so the better choice depends on the investor’s goals and tax situation.
At rates stated for July–September 2026, PPF offers 7.1% and NSC offers 7.7%.
A ₹5 lakh illustration grows to about ₹7,04,560 in PPF and ₹7,24,520 in NSC after five years.
The estimated pre-tax gain is ₹2,04,560 for PPF versus ₹2,24,520 for NSC.
NSC interest is taxable, while PPF interest is exempt from income tax.
The PPF calculation assumes an existing ₹5 lakh corpus because annual PPF contributions are capped at ₹1.5 lakh.
- Who
- Investors deciding between the Public Provident Fund and National Savings Certificate.
- What
- A comparison of the projected five-year growth, taxation, and features of a ₹5 lakh investment in PPF and NSC.
- Where
- In India’s government-backed small-savings schemes.
- When
- The rates cited apply to the July–September 2026 quarter, as stated on 23 August 2026.
- Why
- To help investors choose between higher pre-tax NSC returns and tax-free PPF interest based on their financial goals and circumstances.
PPF Advantages
NSC Advantages
Return and taxation
PPF Advantages
PPF offers a lower stated rate of 7.1%, but its interest is exempt from income tax.
NSC Advantages
NSC offers a higher stated rate of 7.7% and produces the larger pre-tax amount, but its interest is taxable.
Investment horizon
PPF Advantages
PPF is intended for long-term wealth generation, has a 15-year tenure, and permits extensions in five-year blocks.
NSC Advantages
NSC has a five-year maturity, making it more directly suited to the stated five-year investment horizon.
Rate certainty
PPF Advantages
PPF rates are reviewed quarterly, so the rate may change over time.
NSC Advantages
The NSC rate is locked for the certificate’s five-year tenure.
Key facts
- PPF interest rate
- 7.1% for July–September 2026
- NSC interest rate
- 7.7% for July–September 2026
- PPF value after five years
- Approximately ₹7,04,560 in the illustration
- NSC value after five years
- Approximately ₹7,24,520
- PPF maturity
- 15 years, with possible extensions in five-year blocks
- NSC maturity
- Five years
- Tax treatment
- PPF interest is tax-free; NSC interest is taxable at the applicable tax slab rate
- PPF annual contribution limit
- ₹1.5 lakh per financial year
Sources
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