Kisan vikas patra v/s NSC: Understanding key differences
What's the story
Kisan Vikas Patra (KVP) and National Savings Certificate (NSC) are two popular savings schemes in India. Both of them provide a safe investment option for those looking to grow their money over time. However, they differ in terms of returns, maturity period, and other features. Here's a look at the key differences between KVP and NSC to help you make an informed investment choice.
#1
Understanding Kisan Vikas Patra
Kisan Vikas Patra is a savings scheme that doubles the investment amount in a fixed period. Currently, the maturity period is around 124 months (10 years and four months). The scheme allows investors to deposit a minimum of ₹1,000 with no upper limit. KVP can be purchased from post offices across India and offers a simple way to double one's money.
#2
National Savings Certificate explained
The National Savings Certificate is a fixed-income investment scheme that provides guaranteed returns over a specific period. It comes in two variants: NSC VIII Issue and NSC IX Issue, with maturity periods of five years and ten years, respectively. The minimum investment is ₹1,000 with no maximum limit. Unlike KVP, NSC does not double the investment but offers attractive interest rates.
#3
Interest rates comparison
The interest rate for Kisan Vikas Patra is currently pegged at around 7.5% per annum, which is compounded every quarter. This means that the principal amount doubles in the given time frame. For National Savings Certificate, the interest rate is around 7% per annum, compounded semi-annually. While both offer competitive rates, KVP's structure ensures that the money doubles by maturity.
#4
Tax implications and benefits
Investments in National Savings Certificate qualify for tax deductions under Section 80C of the Income Tax Act up to ₹1.5 lakh annually. However, Kisan Vikas Patra does not offer any tax benefits on principal investments but may be subject to tax on accrued interest if it exceeds ₹10,000 in a financial year. Investors should consider these tax aspects when choosing between these options.