PPF vs NPS: If you don’t want to take too much risk while working there are two good options to prepare for your retirement other than PF. Good benefits can be obtained through Public Provident Fund, National Pension System. But which of these two options should you choose? Don’t know and get confused. If you too are confused about choosing between these two options then experts suggest to know the pros and cons of NPS along with PPF.
If we want to secure our future financially, we must have the necessary funds ready. If you don’t want to take too much risk while working there are two good options to prepare for your retirement other than PF. Good benefits can be obtained through Public Provident Fund, National Pension System. But which of these two options should you choose? Don’t know and get confused. If you too are confused about choosing between these two options then experts suggest to know the pros and cons of NPS along with PPF. In this context, let’s take a look at the main differences between these two schemes.
Public Provident Scheme
PPF is a long-term savings scheme run by the government. It is considered the best option to save money for retirement. PPF is considered a safe investment option according to experts. It is a long-term savings scheme that provides fixed returns as mandated by the government. There is no upper limit for investment amount in PPF. Its tenure is 15 years. 500 to 1.5 lakh per year can be invested in PPF account here. Investing in PPF is also good for tax saving.
Because there is no tax on the interest earned on the invested amount. As per Section 80C of Income Tax, this amount is tax free. An Indian citizen means anyone above the age of 18 can open a PPF account and invest in it. The scheme is not applicable to Non-Residents of India (NRIs) or Hindu Undivided Families (HUFs). A person can have only one PPF account in his name. Joint accounts are not allowed. Anyone can open additional PPF account for disabled or minor.
National Pension System
NPS is a Voluntary Retirement Savings Scheme. It is a government scheme that allows citizens to invest in their future during their working life. Sixty percent investment in NPS can be withdrawn at the time of retirement. The remaining 40 percent will be used to purchase a pension plan. NPS is not a fixed-income investment. Returns on NPS are linked to market risk.
An employee can invest up to 20 percent of salary in NPS. NPS is open to all Indian citizens between the age of 18 to 70 years. By joining the scheme, you can get the benefits by investing regularly. Your age must be between 18 to 70 years when you apply for POP/SP. In particular, the account holder must provide the relevant documents to open the account.
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