NPS vs PPF Calculator

It depends on your risk appetite and retirement timeline. NPS invests in equity + debt (expected 9-12% CAGR) and is ideal if you want market-linked growth and a pension. PPF gives guaranteed 7.1% (FY 2025-26) with sovereign safety. For aggressive savers under 40, NPS typically builds a larger corpus. Conservative investors or those needing guaranteed returns should prefer PPF. Many financial planners recommend using both — max out PPF (₹1.5L/year) for safety and add NPS for the extra ₹50K tax deduction under 80CCD(1B).

PPF qualifies under Section 80C (up to ₹1.5 lakh). NPS gets the same 80C benefit PLUS an additional ₹50,000 deduction under Section 80CCD(1B) — a total of ₹2 lakh in deductions. If your employer contributes to NPS, that is deductible under 80CCD(2) up to 14% of basic salary (central govt) or 10% (others), over and above the ₹2L limit. PPF maturity is fully tax-free (EEE status). NPS corpus: 60% lump sum is tax-free on maturity, but the 40% mandatory annuity income is taxable as per slab.

PPF has a 15-year lock-in but allows partial withdrawals from the 7th year (up to 50% of balance at end of 4th preceding year). Premature closure is allowed after 5 years for specific reasons (illness, higher education) with a 1% interest penalty. NPS locks in until age 60 but permits partial withdrawal (up to 25% of own contributions) after 3 years for specific purposes like children's education, home purchase, or critical illness — maximum 3 times. Early exit from NPS before 60 requires purchasing an annuity with at least 80% of the corpus.

Yes. Employer NPS contribution under Section 80CCD(2) is deductible over and above the ₹1.5L (80C) and ₹50K (80CCD(1B)) limits. Central government employees can claim up to 14% of basic salary; private sector employees up to 10%. For example, if your basic is ₹8 lakh and employer contributes 10% (₹80,000) to NPS, you save an additional ₹24,960 in tax (at 31.2% slab). This makes NPS the only instrument offering up to ₹2.5 lakh+ in total deductions. PPF has no employer contribution mechanism.

PPF currently offers 7.1% p.a. (reviewed quarterly by the government). Investing ₹1.5 lakh/year for 25 years in PPF yields approximately ₹1.03 crore. NPS returns depend on asset allocation — aggressive (75% equity) has historically delivered 10-12% CAGR since inception (2009). At 10% CAGR, ₹1.5 lakh/year for 25 years grows to roughly ₹1.48 crore. However, NPS returns are market-linked and not guaranteed. The key difference: PPF corpus is fully tax-free; NPS requires 40% annuity purchase, and annuity income is taxable.