PPF is 100% tax-free but capped at ₹1.5L. NPS gives equity returns + ₹50K extra deduction but forces 40% into annuity. Here's the complete post-tax comparison.
📅 Updated March 2026
🧮 Post-Tax Calculator
💡 Tax Savings Compared
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🧮 NPS vs PPF Calculator
Compare tax-free PPF vs partially-taxable NPS on maturity
Per Year₹1.50 L
PPF max: ₹1.5L/yr. NPS: No upper limit.
Years20 yrs
5yr15yr (PPF min)35yr
PPF Rate7.10%
5%7.1% (current)9%
NPS Return10.0%
7%10% (blended)14%
🏛️ PPF
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100% tax-free maturity
📊 NPS
—
60% tax-free + 40% annuity
Run calculator to see verdict
Adjust sliders and click Compare.
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PPF Corpus
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NPS Lump-sum
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NPS Monthly Pension
NPS vs PPF — Corpus Growth Over Years
Tax-free PPF vs higher-return NPS comparison
💰 Tax Benefits Comparison
Tax Aspect
🏛️ PPF
📊 NPS
Investment Deduction
80C — up to ₹1.5L
80C ₹1.5L + 80CCD(1B) ₹50K extra
Annual Interest/Return
Fully exempt (EEE)
Tax-deferred (not taxed now)
Maturity (lump-sum withdrawal)
100% tax-free
60% tax-free; 40% must buy annuity
Annuity (monthly pension)
N/A
Taxed at income slab rate
Partial Withdrawal
After 7 years (partial)
After 3 years (25% for specific needs)
Lock-in
15 years (extendable)
Until age 60
Section 80CCD(2) (employer NPS)
Not applicable
Employer contribution up to 14% of salary — over and above ₹2L!
Strategy Guide
NPS vs PPF — Who Should Choose What
🏛️
PPF — Best For
Conservative investors who want guaranteed, risk-free, fully tax-free returns. Self-employed (no Section 80CCD(2)). People who don't want annuity complexity at retirement. Short-term liquidity possible after 7 years.
EEE — Invest, Earn, Withdraw all tax-free
📊
NPS — Best For
Salaried employees with employer NPS contribution (extra 14% of salary benefit). Aggressive investors in Tier I (up to 75% equity). Those in 30% tax slab — extra ₹50K deduction saves ₹15,600 tax annually. Long 30+ year horizon.
₹1.5L/yr → PPF (80C limit, tax-free maturity) + ₹50K/yr → NPS (80CCD(1B) extra deduction). Combined tax saving: ₹46,800 (PPF) + ₹15,600 (NPS) = ₹62,400/year saved in taxes at 30% slab.
Best of both worlds strategy
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NPS Caveat: Annuity Requirement
At retirement (age 60), you must use 40% of NPS corpus to buy annuity. Annuity income is taxed at your slab rate. At ₹30,000/month annuity income in retirement, this may push you into the 20% tax bracket — plan accordingly.
Both serve different purposes. PPF is fully tax-free (EEE), guaranteed by Government, and gives complete corpus on maturity. NPS offers higher potential returns (equity allocation), extra ₹50,000 80CCD(1B) deduction, and employer contribution benefit. Best strategy: max PPF (₹1.5L) + contribute ₹50K to NPS for extra deduction.
What is the current PPF interest rate?▼
PPF interest rate is 7.1% p.a. for Q1 FY 2025-26 (April–June 2025), compounded annually. The rate is set by the Government quarterly. It has been between 7.1% and 8% over the past 5 years. Interest is completely tax-free.
What is NPS equity allocation?▼
NPS Tier I offers up to 75% equity allocation (E class: Nifty 50-linked equity). The remaining is in Corporate Bonds (C class) and Government Securities (G class). You can choose Active Choice (set your own allocation) or Auto Choice (age-based glide path from 75% to 25% equity).
Can I withdraw from NPS before retirement?▼
After 3 years of contribution, you can withdraw up to 25% of your own contributions for specific purposes: higher education, marriage, house purchase, critical illness. This partial withdrawal is tax-free. For exit before age 60, 80% must be used for annuity.
Is NPS 80CCD(2) better than 80C?▼
80CCD(2) allows employer contributions to NPS (up to 14% of basic+DA for central govt employees, 10% for private sector) to be deducted from taxable income — completely separate from the ₹1.5L 80C limit. For a ₹10L/year employee in 30% bracket, this can save ₹42,000+ annually in additional taxes.