KVP vs NSC: Tax, Limit, Lock-In, Premature Withdrawal

Kisan Vikas Patra (KVP) Vs. National Savings Certificate (NSC)

KVP and NSC are small savings investment schemes. Here are few differences between both the investment options:

Tax Exemption

Interest earned or amount invested in KVP is taxable whereas in case of NSC there is no tax under section 80C on the interest earned and the amount invested.

Interest Rate

KVP offers annual interest rate of 8.7% (i.e. money invested gets doubled during the maturity). In case of NSC, 8.5% and 8.8% p.a. interest is offered for 5 and 10 year respectively.

Maturity/Lock-In Period

NSC mandates lock-in period of 5 years or 10 years. Whereas in KVP it is 2.6 years although the maturity is 8.4 years.

Denominations

KVP offers following 4 denominations:

  • Rs. 1,000
  • Rs. 5,000
  • Rs. 10,000
  • Rs. 50,000

NSC offers:

  • Rs. 500
  • Rs. 1,000
  • Rs. 5,000
  • Rs. 10,000

Premature Withdrawal

Not possible in NSC but KVP offers pre-defined amount for withdrawal and interest rate is dependent on the period. Also see benefits of new KVP

Similarities in KVP and NSC

  1. Maximum investment limit: There is no maximum limit in both
  2. Both can be purchased from post-office and issued by government of India
  3. Both can be used as collateral for bank loans
  4. Cannot be purchased online
  5. Both are fixed investment plan

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