NSC vs. KVP – Which Saving Scheme is better for you?
NSC and KVP are two investment schemes that have gained a lot of popularity in recent times. Amongst the several saving schemes offered by the post office, National Saving Certificate (NSC) & Kisan Vikash Patra (KVP) are the two of the most popular schemes offering a good rate of return. These schemes have managed to catch the attention of investors mainly because of continuous falling interest rates on bank fixed deposits (FDs).
NSC is a fixed income scheme popular among the citizens of India for tax saving while KVP is a scheme where money invested gets doubled after a fixed term. Since both the schemes are backed by the Government of India, both are low-risk schemes and are relatively secure. While both schemes have certain similarities, they differ in certain points as well.
This article will compare the features of both NSC and KVP schemes to understand the best option for you.
National Saving Certificate (NSC) – Overview
NSC is a Government of India-sponsored fixed income scheme and is ideal for investors willing to invest small to medium amounts. A person can invest in NSC at any branch of a post office.
Currently, the scheme yields an interest of 6.8 % per annum, compounded annually and paid at the end of the tenure of 5 years. The rate of NSC gets revised by the government regularly. However, the rate of interest gets fixed at the time of investment in the scheme.
Upon investment in NSC, post offices issue a passbook as proof of investment. A fresh passbook is issued whenever you buy NSCs. An investor can invest in several NSCs but in one single day, an investor can buy only one NSC.
Kisan Vikash Patra (KVP) – Overview
KVP is one of the most popular Post Office Saving Schemes schemes among investors. The main feature of the scheme is to double the amount invested by the investor.
The tenure of the KVP scheme is fixed based on the interest rate offered and how long it will take to double the money. For the investment made up to 31st March 2022, the interest of 6.9% per annum is offered for a tenure of 124 months to double the investment.
KVP allows an investor to withdraw money after 30 months (2.5 years) from the date of investment in the scheme.
Feature Comparison – NSC vs KVP
National Saving Scheme (NSC)
Kisan Vikash Patra (KVP)
|Rate of Interest||6.8 % p.a.||6.9% p.a.|
|10 Years 4 month
|Compounding of Interest||Compounded Annually||Compounded Annually|
|Minimum Deposit||Rs. 1,000 (and then in multiples of Rs.100)||Rs. 1,000 (and then in multiples of Rs.100)|
|Maximum Deposit||No Upper Deposit Limit||No Upper Deposit Limit|
|Minimum Lock-in Period||Entire tenure of 5 years.||2.5 years (30 months)|
|Premature Closure Facility||Not Available||Can be closed after 2.5 years.|
|Tax Benefits||Investment in NSC qualifies for a deduction u/s Section 80C of the income tax act max. up to Rs.1.50 lakhs.||No tax benefit|
NSC vs KVP – Which is better?
If you want to save tax along with an investment, prefer to invest in NSC. However, if you are looking for a better return and have no qualms about locking your cash for a long tenure, you can choose to invest in KVP. Further, KVP allows an investor to close it prematurely (return as per the time you choose to close) while you must keep your NSC for five years. In terms of risk profile, both schemes are Government-sponsored and as mentioned before, are low-risk schemes.