Introduction
National Pension scheme and public provident fund is long term investment instrument where everyone wants to invest for retirement and long term. If you are salaried person and wants to create retirement corpus so NPS and PPF is great choice and most important it provide tax benefit under 80 c.
What is the National Pension Scheme (NPS)?
NPS was started by the government of India on 1st January 2004. In earlier days, it was available only to government employees since 2009, every individual between the ages of 18 and 65 can opt to avail of the benefits offered under this investment scheme. The Pension Fund Regulatory and Development Authority (PFRDA) regulates the operation of NPS. You can keep contributing till you are 70 years old.
Subscriber can create two way NPS.
Tier 1:- Any individual who is a salary holder can create a tier 1 account between the Age of 18 to 65 years. In tier-1 there is a strict premature withdrawal condition and subscribers will have to obtain a Permanent Retirement Account Number (PRAN). The minimum investment in NPS is 1000 rs.
Tier 2:- If any subscriber wants to open a tier 2 account he or she will have to open a tier 1 account then they will be eligible for tier 2, in tier 2 there is no lock-in period and the subscriber can start an investment with 500 rs minimum. In tier 2 subscribers can withdraw investments at any time.
Tax benefit in NPS. In tier-1 subscribers can be eligible for up to 1.5 lakh tax benefits under section 80CCD(1) and 5000 rs under 80CCD (1B) but in the case of tier 2 there is no tax available.
What is public provident fund (PPF) ?
Public Provident Fund is a long-term saving scheme offered by govt of India via commercial banks and post offices. In PPF, there is a 15-year of lock-in period and provides tax benefits up to 1.5 lakh under 80 C.
In PPF there is a lock-in- period of 15 years and the account holder will be able to withdraw the amount from 5 year onwards.
The rate of interest in PPF is 7% per annum and the Account holder is also eligible for a loan against the PPF amount with a 1% interest rate.
The minimum amount invested in PPF is 500 rs, the account holder can start investing with 500 rs.
Conclusion
NPS and PPF are risk-free investment schemes and it is a government scheme investment plan so kindly go through the above detail I have shared in detail what is NPS and PPF. interest rate and lock-in period. It is the safest investment scheme plan and if anyone doesn’t have knowledge about the stock market, mutual funds any other investment plan they can go for it