Both NSC and PPF are government-backed 80C instruments — but the right choice depends on your tax bracket and time horizon.
Rate Comparison
NSC: 7.7% compounding annually, 5-year lock-in. PPF: 7.1% compounding annually, 15-year lock-in. NSC appears better, but tax changes the picture. See the full [NSC vs PPF comparison](/compare/nsc-vs-ppf).
Post-Tax Returns
30% bracket: NSC effective rate ≈ 5.4% (interest taxable). PPF effective rate = 7.1% (fully tax-free). PPF wins by 1.7%. 20% bracket: NSC ≈ 6.2% vs PPF 7.1%. PPF still wins. 5% bracket: NSC ≈ 7.3% vs PPF 7.1%. NSC marginally better.
NSC's Hidden Advantage
NSC interest is deemed reinvested — this reinvested amount qualifies for fresh 80C deduction in years 2-5. This effectively reduces the tax impact, making NSC competitive even at higher brackets.
Recommendation
Use both: PPF for long-term retirement (₹1-1.5L/year), NSC for shorter 5-year goals. Calculate your savings with our [PPF Calculator](/calculators/ppf-calculator) and [FD Calculator](/calculators/fd-calculator).