NSC and PPF Comparison
1. Return - 8% on both.
2. Lockin Period -15 Years for PPF and 6 years for NSC
3. PPF - Principal + Interest (fully exempt from tax), Tax Payable on Interest at the end of sixth year in NSC
4. Interest earned every year on NSC can be shown as reinvestment under Section 80 c for the current year.
if you invested Rs 50,000 in NSC in Jan'06.You would have availed Rs 50,000 under Sec 80c last year.
You can also claim the interest earned on 50,000 during the current year under Section 80 c.
See Table below for details.
From a taxation point of view PPF is better (Why you must have a PPF account?), if you are comfortable with the lock in period of 15 years.