New Delhi: Public Provident Fund (PPF), Employees’ Provident Fund (EPF), and National Pension System (NPS) are considered to be one of the best investment schemes for saving money for long term. In this article, we inform you about the details of the three investments schemes which are controlled by the central government.
Public Provident Fund
- PPF is a government-controlled long-term savings scheme.
- Period of Investment: 15 years, which can be extended after maturity.
- Interest rate: Currently, the rate is 7.1 per cent. The government decides the rates every quarter.
- Tax benefit: The deposit qualifies for deduction under Sec 80-C of I.T.Act. The interest earned in the account is free from Income Tax under Section -10 of I.T.Act.
- Risk factor is Nil
- PPF is for people looking to invest in government-controlled long term savings plan and want safe and guaranteed returns.
Employees’ Provident Fund
- EPF is designed for salaried employees, where both the employee and employer contribute.
- Contribution: 12% of basic salary + DA
- Interest rate is decided every year: Currently, the EPF Interest Rate stands at 8.25%.
- Tax benefit: The deposited principal amount, interest, and maturity are tax free.
National Pension System
- NPS is governed by the government but is a market-linked scheme. The investors’ money is invested in both equity and debt.
- Returns are based on market conditions
- Tax benefit: Tax deduction up to 10% of salary (Basic + DA) under section 80 CCD(1) within the overall ceiling of Rs 1.50 lakh under Sec 80 CCE.
Tax deduction up to Rs 50,000 under section 80 CCD(1B) over and above the overall ceiling of Rs 1.50 lakh under Sec 80 CCE. - NPS Maturity: At age 60, up to 60% can be withdrawn as a lump sum, and 40% must be used to buy an annuity.
- NPS is controlled by the government but people who are willing to bear the risks involved in stock market, should invest.