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National Savings Certificate(NSC) vs Kisan Vikas Patra(KVP)-Differences, Which to buy?

Written by - Rudri Rawell

December 5, 2022 5 minutes

Rising inflation and RBI’s constant measures to control it has resulted in higher interest rates. Most major banks in the country have started raising interest rates on deposits and loan products alike. To make the most of a rising interest rate scenario, investors who have excess funds to park aside can consider investing in avenues like the NSC or National Savings Certificate or the KVP or Kisan Vikas Patra to enjoy risk-free returns.

Let’s have a look at NSC and KVP in detail while also trying to understand the key factors that differentiate these two investment avenues.

What is NSC – National Savings Certificate?

National Savings Certificate (NSC) is an investment scheme that was launched by the Government of India to cater to the country’s low and middle-income groups. The scheme is designed to offer fixed returns to investors along with tax deduction benefits. 

NSC is somewhat similar to Public Provident Fund (PPF) and Post Office FDs as it offers risk-free fixed returns.

Some of the key features of NSC are:

  • NSCs can be availed from banks and post offices
  • There is no upper limit on investing in NSC. However, the minimum investment should be Rs 1,000 per financial year
  • One can open multiple NSC accounts
  • These come with a 5-year lock-in period
  • Investors can invest in this scheme individually, jointly or on behalf of a minor.
  • This investment allows investors to avail tax benefits as per provisions of Section 80C of the Income-tax Act, 1961. 
  • An investor can transfer NSC certificates to another individual. In the case of NSC VIII, this can be transferred only once between the registration date and maturity date.

Effective July 1 2022, the interest rate on a 5-year NSC is 6.8%. This interest rate is compounded annually and interest earnings are paid at maturity. Thus, the interest is not paid out but re-invested and it is also eligible for tax deduction under Section 80C (except in the 5th year of investment). The tax deduction on NSC is a maximum of Rs. 1.5 lakh per financial year.

Suggested Link: NSC Interest Calculator

What is KVP – Kisan Vikas Patra

KVP or Kisan Vikas Patra is one of the safe and small savings schemes offered by the Government of India and regulated by Indian post offices. Just like NSCs, this scheme was also designed with the intention to encourage investment among low and middle-income citizens in rural and semi-urban India.

Few of the key features of KVP are:

  • There are 3 types of accounts under the scheme:
    • Single-holder accounts, 
    • Joint A, and 
    • Joint B accounts
  • Only Indian residents can invest in this scheme
  • One must make a minimum annual investment of Rs. 1,000 with no upper limit
  • The interest rate offered under the scheme is 6.9% as of 2022 
  • Interest is not distributed during the investment period. 
  • The interest is compounded annually thus doubling the invested amount after 124 months or 10 years + 4 months.
  • KVP interest earnings are taxable as per the individual’s tax bracket 

Since the corpus of this scheme is mainly used by the government for farmers’ welfare, it plays an important role in the agricultural development of the country. 

Read more: How to buy KVP?

What is the difference between NSC and Kisan Vikas Patra?

Although NSC and KVP are both similar, in that, they are low-risk investment avenues with guaranteed returns, each has its unique features.

The table below summarises the key differences between these two investment options:

Interest rate6.8%6.9%
Lock in period5-years30 months
Premature withdrawalNot allowedAfter completion of 2 years 6 months from account opening.
Tax benefitAs per provisions of Section 80C of the IT Act.Not applicable

Which is better NSC or KVP?

Listed here are some important points on NSC and KVP that will allow investors to make an informed investment choice:

NSC is ideal for:

  • Those looking for tax-saving investment opportunities
  • Those who can stay invested for minimum 5 years 

KVP is ideal for:

  • Those looking for a low-risk investment option that can double the invested amount at maturity
  • Those who prefer a smaller investment period as compared to NSC


To conclude, both NSC and KVP are safe investment avenues offering fixed returns. Before investing in either of them, investors must go through the key differences between these two as mentioned above.

Either or both of these can be included in an investment portfolio for guaranteed long-term returns that can be used for specific financial goals. 


Is KVP better than FD?

KVP is better than FD in the long run since this investment format allows investors to get double the capital at maturity, which is 10 years and 4 months.

Is NSC maturity taxable?

The interest earnings from NSC, that are received at maturity, are taxable. However, for the amount invested each year in NSC, an investor can claim up to Rs. 1.5 lakhs as tax deductions.

Can I invest monthly in NSC?

Yes, you can buy NSC certificates every month, depending on your financial planning. You can also opt for a lump-sum investment in these.

How many NSC can I buy in a year?

There is no limit on the number of NSC purchases you can make in a year. However, only investments of up to Rs. 1.5 lakhs in NSC get a tax break under Section 80C of the Income Tax Act.

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