PPF vs NPS: Both Public Provident Fund (PPF) and National Pension System (NPS) scheme are considered good retirement-oriented investment options. When it comes to income tax filing, both PPF and NPS scheme help investors to claim tax exemption. However, when it comes to returns, experts are of the opinion that NPS will give 2 per cent more returns, provided the investor chooses this option while investing in NPS.

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Comparing PPF and NPS, Manikaran Singhal, a SEBI registered tax and investment expert said, "PPF is a debt fund in which an investor can claim income tax benefit on investment up to Rs 1.5 lakh in a year under Section 80C of the Income Tax Act. However, in the NPS scheme an investor can claim income tax benefit under Section 80CCD on investment up to Rs 50,000 per annum, which is exclusive from Section 80C income tax benefit." 

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He said that in PPF, one can expect around 8 per cent return in the long-term while in the NPS scheme, an investor has the option to choose debt and equity in two different NPS accounts — Active mode and auto mode — at the time of NPS registration. Suggesting how an investor can enhance one's income on one's money invested in the NPS scheme,  Singhal added, "Why would an investor invest in NPS when he already has PPF available? Either for an additional Rs 50,000 income tax benefit after crossing the Section 80C exemption limit in PPF of Rs 1.5 lakh or for better returns with limited risk as NPS scheme gives you to choose the debt and equity ratio."

Speaking on the NPS benefits and how an investor can outperform PPF return through NPS scheme, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "According to the NPS interest calculator, if someone chooses 50:50 ratio in active and auto mode of the NPS account, he or she will get around 8 per cent returns on the debt NPS account in long-term while in equity NPS account he or she can expect at least 12 per cent returns in the long-term. So, choosing a 50:50 option will help an investor get around 6 per cent on equity NPS account and 4 per cent on the debt NPS account, making it around 10 per cent NPS returns in long run, which is around 2 per cent higher than the PPF returns in long-term. Currently, the PPF interest rate is 7.9 per cent.