Detailed Analysis
Both NSC and PPF are government-backed instruments eligible for Section 80C deduction.
NSC offers 7.7% interest with a 5-year lock-in. Interest is compounded annually but deemed reinvested — this reinvested interest qualifies for 80C deduction in subsequent years. However, maturity proceeds are taxable.
PPF offers lower 7.1% interest but with complete tax exemption (EEE). The 15-year lock-in is long, but the tax-free compounding makes the effective post-tax return higher than NSC for those in 20-30% tax brackets.