Comparison between PPF, NSC & Tax saving fixed deposits

December 15, 2011   ·   10 Comments

http://stockssavvy.comWith December in, corporate employees are trying to figure out the ways for doing the tax saving as they have to show the proof that they have been doing tax saving. There are 6 popular ways which are famous among investors to do their tax planning:

1)      Insurance cum investment Plans

2)      ELSS Tax saving funds

3)      (National Saving Certificate)

4)      Public provident funds

5)      Tax saving Mutual funds

6)      Unit linked Insurance Plans

With market correcting 25% from its recent highs of last year, some people are taking this as an opportunity & trying to enter markets through ULIP’S & Mutual funds but most of them are skeptical about markets & want the safe roof for their investment.

Let us have a comparison of Low risk , which will yield the best return for a conservative investor by taking an example:

Ravish is a conservative investor & is trying to figure out from the last few days which will be the best way to do his tax saving. Agent who used to come earlier every year hasn’t come this year. He is astonished on the fact that how the guy who was doing his tax saving from the last few year suddenly vanished? He is unaware of the fact that agent are no longer getting any commission for doing the NSC & PPF. Moreover, he is getting calls/sms from insurance companies assuring them on spectacular returns & wants to meet him desperately. Being a savvy investor, Ravish don’t want to take insurance cum investment plan as he know the returns offered in these kinds of plans. Let us figure out how he should do his tax saving:

Investment Return Investment Amount Interest TDS Applicable on Interest Tax Slab Interest after Deduction
Public Provident Fund 8.6 % 1,00,000 Rs. 8,600 Rs. No 10% 8,600 Rs.
NSC 8.7 % 1,00,000 Rs 8,700 Rs. Yes 10% 7,830 Rs.
Tax saving Fixed Deposit 9.5 % 1,00,000 Rs 9,500 Rs. Yes 10% 8,550 Rs.

After the head on head comparison, we come to know that even though the return offered by other tax saving instrument is high. But as the interest earned on them is taxable, Ravish will net pocket the highest amount of money doing the public provident fund.

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Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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  • To me ELSS is the best tax saving options

  • Can’t agree more Mayank..It always is.. 🙂


    a good one.with simply derived………very neat to understand……thanks………

  • @Arghya

    I am glad you liked it… 🙂

  • pradyumna

    TAX saving FD’s can earn better returns than PPF &NSC???
    Agree or disagree…?

  • mansi

    which one is better from nsc and tax saving fd for 30 year old invester

  • Mansi,

    PPF is better than Tax saving FD which is better than NSC.

  • Disagreed.

    PPF has got the best returns than Tax saving FD’s.

  • Thanks Arghya.

  • ELSS is always the best option. Totally agree.

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