te PPF vs NPS: What is better for creating retirement fund | EXPLAINED | Zee Business

PPF vs NPS: What is better for creating retirement fund | EXPLAINED

PPF vs NPS: Creating retirement fund via risk-free investment tools, Public Provident Fund (PPF) and National Pension System (NPS) or NPS scheme is considered one of the most suitable investment options

PPF vs NPS: What is better for creating retirement fund | EXPLAINED
Asked about the return one can expect after the maturity period Likhita Chepa said that an investor investing in PPF can expect to get around 8 per cent on one's money while in NPS, the investor can expect around 12 per cent return on one's investment.

PPF vs NPS: Creating retirement fund via risk-free investment tools, Public Provident Fund (PPF) and National Pension System (NPS) or NPS scheme is considered one of the most suitable investment options. But, when it comes to choosing one of these two investment tools, what an investor will do? The Zee Business flagship programme Money Guru has an answer in this regard.

Speaking on PPF vs NPS Likhita Chepa, Lead Research at Capitalvia Global Research Limited said, "PPF is a central government-backed small savings scheme where an investor gets an assured or guaranteed return (currently at 7.1 per cent) while NPS return is market-linked. Hence, a PPF investment is risk-free while NPS investment involves market risk." Chepa went on to add that both types of investments involve lock-in period but in case of NPS it's just three years while in PPF, the lock-in period is 15 years.

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Asked about the return one can expect after the maturity period Likhita Chepa said that an investor investing in PPF can expect to get around 8 per cent on one's money while in NPS, the investor can expect around 12 per cent return on one's investment. But, Chepa said that PPF investment has Rs 1.5 lakh investment limit in a financial year while in NPS, there is no limit on one's investment.

Highlighting the income tax rules involved in PPF and NPS Chepa added that in PPF, maturity amount is free from any income tax as it falls under the EEE category where an investor is exempted from paying tax on one's investment, interest earned and the maturity amount while in the case of NPS, one's investment is exempted under the Section 80C of the Income Tax Act on NPS withdrawal, there is 10 per cent capital gain tax involved that an investor needs to pay.
 

Reported By: ZeeBiz WebTeam
Written By: ZeeBiz WebTeam
Edited By: Harish Dugh
Updated: Sat, Jan 09, 2021
07:10 am
Patna, ZeeBiz WebDesk
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