KVP Vs NSC: The NSC scheme is currently getting 6.8 percent interest. The government announces interest rates for both the schemes. If the interest rate changes, the return also changes. The NSC has to run for 5 years and during this time the depositor cannot withdraw his capital.
Both Kisan Vikas Patra (KVP) and National Saving Certificate (NSC) are schemes of the Government of India which can also be taken at the post office. You might be confused as to which scheme should be taken between the two and which is better in both. Know at the very beginning of the article that NSC investment gives a way to save tax along with returns. On the contrary, Kisan Vikas Patra or KVP gives returns, but you cannot save tax on it. Hence, for depositors who need to save tax, NSC is better than KVP. But in terms of returns, KVP is slightly higher than NSC in terms of interest.
Now let’s see the big difference between the two. First of all talk about NSC. In this scheme, the depositor gets a guaranteed return which is currently 6.8 per cent per annum. Currently, 6.8 percent interest is being given in the NSC scheme. The government announces interest rates for both the schemes. If the interest rate changes, the return also changes. The NSC has to run for 5 years and during this time the depositor cannot withdraw his capital. On maturity, interest is paid along with the principal amount. You can start saving in this scheme with just Rs 100. You can start NSC scheme in post offices also.
Better returns in both
Like NSC, KVP is also a government-backed deposit scheme on which the interest rate is compounded. In KVP, the government issues letters on the basis of Rs. This letter can be taken from the post office. The interest rate fixed at the time of issuance of the letter can also change, but the guaranteed return is definitely available. If the customer wishes, after 30 months, that letter can be redeemed with interest. Currently, the rate of interest on KVP is 6.9 percent. A minor can also take KVP. Like NSC, it can also be transferred to someone else under the rules. The big difference from NSC is that KVPs cannot avail tax exemption on maturity.
Big difference between the two
One can also open an account in NSC with Rs 100, but the minimum deposit amount in KVP is Rs 1000. If you invest in NSC today, when the interest rates are 6.8 per cent. However, the purpose of KVP is to double the investment amount at the end of the maturity period, which is not the case with NSC. One has to invest more days in KVP than in NSC. The money deposited in NSC cannot be withdrawn prematurely. It can be withdrawn only on maturity, whereas in KVP, withdrawal is allowed after 30 months.
A depositor in NSC can claim tax deduction on the investment money. The depositor can claim a deduction of up to Rs 1,50,000. This claim can be made under section 80C. However, tax deduction cannot be claimed in case of KVP. Both NSC and KVP certificate can avail loan. Loan facility is available only on the deposited capital.
