NPS vs PPF — which is better?
Two tax-friendly long-term options — one market-linked and locked till 60, one safe and tax-free for 15 years.
The verdict (₹10,000/mo · 20 years · 30% slab)
NPS (Tier-1) leaves you richer — about ₹23.96L in today's money, ~₹7.86L more than PPF, after tax and inflation.
NPS (Tier-1) wins on growth but carries risk; PPF is safer. Your answer depends on your numbers — change them below.
NPS (Tier-1)
Best for dedicated retirement money you won't touch till 60.
- ✅ Market-linked growth, very low cost (~0.1%)
- ✅ Extra ₹50,000 deduction under 80CCD(1B)
- ✅ Up to 80% can come out as a lump sum at 60; 60% of the corpus is tax-free
- ⚠️ Locked till age 60
- ⚠️ At least 20% must buy a (taxable) annuity; lump sum above 60% is taxed
- ⚠️ Equity exposure is capped
PPF
Best for a safe, tax-free base you won't need for 15 years.
- ✅ Completely safe — government-backed
- ✅ Fully tax-free (EEE) — no tax ever
- ✅ Great low-risk anchor for a portfolio
- ⚠️ Caps at ₹1.5 lakh/year
- ⚠️ 15-year lock-in
- ⚠️ ~7% return trails equity over long horizons
Compare on your own numbers
This shows all four options — NPS (Tier-1) and PPF are the two to watch. Edit the amount, years, tax slab and return assumptions.
Assumptions (tweak freely)
For your inputs
Equity Mutual Fund leaves you with the most — about ₹26.08L in today's money, ~₹13.71L more than Fixed Deposit.
You'd invest ₹24,00,000 over 20 years. Figures below are after tax and after 6% inflation — the money you'd actually keep, in today's value. Equity carries market risk; PPF/FD are safe but grow slower.
Equity Mutual Fund
TOP- Nominal corpus
- ₹91.99L
- After tax
- ₹83.64L
- Lock-in
- None (ELSS: 3y)
- Liquidity
- High
- Risk
- High
LTCG 12.5% on gains over ₹1.25L/yr
NPS (Tier-1)
- Nominal corpus
- ₹76.83L
- After tax
- ₹76.83L
- Lock-in
- Till age 60
- Liquidity
- Low
- Risk
- Medium
60% of corpus tax-free; min 20% → taxable annuity · Extra ₹50k deduction under 80CCD(1B)
PPF
- Nominal corpus
- ₹51.63L
- After tax
- ₹51.63L
- Lock-in
- 15 years
- Liquidity
- Low
- Risk
- None
Fully tax-free (EEE)
Fixed Deposit
- Nominal corpus
- ₹49.89L
- After tax
- ₹39.68L
- Lock-in
- Flexible
- Liquidity
- High
- Risk
- None
Interest taxed yearly at your 30% slab
Estimates on your assumptions — real returns vary. NPS locks till 60 and forces an annuity; PPF locks 15 years; equity can fall short over short horizons. This is information, not investment advice.
NPS vs PPF — FAQ
NPS vs PPF — which is better?
It depends on your horizon, tax slab and risk appetite. For ₹10,000 a month over 20 years, NPS (Tier-1) leaves you with about ₹23.96L in today's money — roughly ₹7.86L more than PPF after tax and inflation. But NPS (Tier-1) carries market risk, while PPF is safer. Change the amount, years and slab in the calculator to see the answer for your situation.
Is NPS (Tier-1) better than PPF for returns?
NPS (Tier-1) is best for dedicated retirement money you won't touch till 60; PPF is best for a safe, tax-free base you won't need for 15 years. On a like-for-like monthly investment the higher-growth option usually wins the nominal corpus, but the honest comparison is after tax and inflation — which is what the calculator on this page shows. Many investors hold both for different jobs rather than picking one.
Should I choose NPS (Tier-1) or PPF?
Choose NPS (Tier-1) if you want dedicated retirement money you won't touch till 60; choose PPF if you want a safe, tax-free base you won't need for 15 years. If you can, using both — one for growth and one for safety/tax-efficiency — usually beats an either/or choice. Enter your numbers above to see which leaves you with more.
More comparisons
Estimates on default assumptions — real returns vary. This is information, not investment advice. Verify current rates and tax rules before investing.