Difference between NSC vs KVP – Which is Better
The KVP (Kisan Vikash Patra) and NSC (National Savings Certificate) are saving schemes sponsored by the Government of India that extend a decent return rate. This article further delves into NSC vs KVP to offer a thorough understanding of these schemes.
Scroll through to know all about it!
What Is NSC?
The NSC or National Savings Certificate is a fixed income investment scheme that individuals can open at any branch of a post office. It is a savings bond that encourages investors with a mid-range income to make investments, alongside savings on income tax.
Moreover, individuals can purchase this scheme either in their name, for a minor or as a joint account with another adult individual. The National Savings Certificate comes with a fixed maturity period of 5 years.
In addition, no maximum limit exists on the purchase of NSCs. However, one must note that as per section 80C of the Income Tax Act, an individual’s income is taxable when his/her investment goes up to ₹1.5 lakhs.
NSCs earn a fixed interest, the rate of which gets revised by the government regularly.
What Is KVP?
The KVP or Kisan Vikas Patra was introduced by the India Post in 1988 as a small savings certificate scheme. The primary objective of this scheme is to encourage financial discipline in individuals on a long term basis. Initially, this scheme was meant for farmers as an option for long-term savings, but now every individual can avail of this scheme.
According to the latest update, if an individual buys this certificate between 1st July 2021 and 30th September 2021, the tenure for KVP is 10 years and 4 months (124 months). There is no upper investment limit, but a minimum amount of ₹1000 must be invested.
Additionally, there is a possibility of receiving double the invested amount at the end of the 124th month on investing a lump sum amount.
Difference Between KVP vs NSC
Now, we will elaborate on the difference between NSC and KVP. A detailed analysis of NSC vs KVP is given below:
| Features | NSC | KVP |
| Rate of Interest | The rate of interest was capped at 6.8% for a five years NSC for the quarter of March 2021. This is payable at maturity but is compounded annually. | The interest rate was capped at 6.9% for KVP for the quarter of March 2021. This is compounded annually. |
| Tenure | The investment period is 5 years | The principal amount can get doubled with a tenure of 10 years and 4 months (124 months). |
| Minimum Deposit Limit | ₹1000 (in multiples of 100) | ₹1000 (in multiples of 100) |
| Maximum Deposit Limit | No upper limit | No upper limit |
| Facility of Account Transfer | These can be transferred from a post office to another or from an individual to another. | Considering certain limited conditions, accounts under this scheme can be transferred from a post office to another or between individuals. |
| Lock-in Period | 5 years | 2 years and 6 months |
| Premature Closing | Not allowed | Allowed after 30 months from the date of account opening |
| Tax Benefits | As per Section 80C of the Income Tax Act, tax deductions can be claimed | Not applicable |
What is Better KVP vs NSC?
Both NSC and KVP are good investment options for individuals seeking safe options with a fixed income. The rates of interest applicable are almost similar as well.
That said, the following pointers shall prove to be helpful for someone trying to take a pick between NSC vs KVP –
Individuals can opt for NSC if:
- Their investment horizon does not exceed 5 years
- They want tax savings as per the Income Tax Act
- They are willing to lock in their money for a period of 5 years
On the other hand, individuals can select KVP if:
- They are willing to invest their money for a period of 2 years and 6 months
- They are seeking a low-risk and assured investment option, which can double their maturity amount
By now, we hope you can decide which is better between KVP vs NSC. So, if you are interested in investing in any of these schemes, keep in mind the various aspects mentioned above. And that brings the article regarding NSC vs KVP to an end.
Frequently Asked Questions
How can individuals know their NSC ID?
One can know his/her NSC ID from the post office or bank. These institutions provide the login credentials through which the NSC account details can be accessed online.
Can individuals transfer their KVP certificate to a bank from the post office?
Yes. Individuals can apply through Form B for transferring their KVP certificate from a post office or bank to another. The account holder(s) should sign the application except in Joint ‘A’ type certificates. In the case of Joint ‘A’ type certificates, if one of the joint account holders passes away, the other one can sign this application.