NPS vs Mutual Fund
5paisa Research Team
Last Updated: 28 Apr, 2025 04:38 PM IST

Content
- Introduction
- What is the National Pension Scheme (NPS)?
- Who Should Invest in the National Pension Scheme (NPS)?
- What is a Mutual Fund?
- Why Invest in a Mutual Fund?
- NPS vs Mutual Fund – Difference Between NPS and Mutual Fund
- Lock-in period
- Benefits of National Pension Schemes
- Key Takeaway on NPS vs Mutual Fund
Introduction
Both NPS and mutual funds present significant opportunities for capital growth in India. Both are easy to invest in and often provide faster capital appreciation than conventional financial instruments. Hence, choosing a clear winner in the ‘NPS vs Mutual Fund’ debate is not easy. Scroll down to the following sections to learn about the top differences between NPS and mutual funds to make the right decision.
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Frequently Asked Questions
In fact, yes. The money can be moved between the three categories of stock, corporate bonds, and government bonds.
A mutual fund investor has access to several funds in which to invest. This is not the case with NPS because the subscriber must remain loyal to a single fund throughout.
No, the SEBI (Securities and Exchange Board of India) regulates and monitors all mutual funds, whereas the PFRDA regulates NPS (Pension Fund Regulatory Development Authority of India).
Any person who subscribes to an NPS may receive a tax advantage under Section 80 CCD (1) up to Rs. 1.5 lac total under Section 80 CCE. Only NPS members are eligible for an extra deduction for investments up to Rs. 50,000 in NPS (Tier I accounts) under paragraph 80CCD (1B). This is in addition to the section 80C deduction of Rs. 1.5 lakh permitted under the Income Tax Act of 1961.