INSUBCONTINENT EXCLUSIVE:
NPS and PPF schemes are aimed at providing financial security to the subscriber during retirementState Bank of India (SBI), the country's
retirement planning-focused instruments provided by the lender under its personal banking portfolio
A PPF account provides an investment avenue with decent returns coupled with income tax benefits, according to SBI's corporate website -
A National Pension System (NPS) account provides social security to the citizens
of India's PPF account and its NPS account:1
EligibilityAccording to SBI, individuals in their own name as well as on behalf of a minor can open PPF account at any branch
As per extant instructions, opening of PPF accounts in the name of Hindu undivided family is not permitted
Meanwhile, an NPS account can be opened by individuals between 18 and 65 years of age.2
Quantum of contributionA minimum of Rs 500 subject to a maximum of Rs
1,50,000 per annum can be deposited in a SBI PPF account
The amount can be deposited in lump sum or in a maximum of 12 installments per year
An NPS account can be maintained at a minimum contribution of Rs
At the same time, NPS offers two types of accounts: Tier 1 and Tier 2
Subscribers must make a minimum contribution of Rs 1,000 per annum for the tier 1 account
For the tier-2 account of NPS, there is no minimum requirement of contribution, said SBI.3
MaturityThe original duration of SBI's PPF account is 15 years
However, on application by the subscriber, it can be extended for 1 or more blocks of 5 years each, as mentioned on SBI's portal
NPS has a longer lock-in than PPF account and the corpus stays locked-in till the age of 60 years
Withdrawal before 60 is also allowed but in that case at least 80 per cent of the corpus ought to be allocated to annuity, which is a
Interest ratesThe rate of interest of PPF account is determined by central government on quarterly basis
At present the rate of interest for a PPF account is 8 per cent per annum
Interest is calculated on the minimum balance (in PPF Account) between 5th day and end of the month and is paid on March 31 every year
The interest rate on NPS contribution is dependent on the pension fund manager (PFM) the account holder chooses.5
Tax benefitsUnder SBI's PPF account, income tax benefits are available under Section 88 of Income Tax Act
Interest income is totally exempt from Income Tax
Amount outstanding to the credit is fully exempted from Wealth Tax also
At the same time, the tier 1 NPS account offers tax benefits while the tier 2 NPS account doesn't offer any such benefit.
