All About National Saving Certificate(NSC) and Kisan Vikas Patra(KVP)

  •  National Saving Certificate-NSC

Under the National Saving Certificates - NSC scheme of the Department of post anybody can deposit a certain amount in a Post Office for five years. The Department of post refunds the amount invested in the NSC scheme along with compound interest to the investor after five years. There is a provision of exemption from Income Tax on the amount invested in NSC. This is the very reason that the salaried persons who fall within the purview of income tax get tempted towards this scheme. Besides, this scheme attracts other people towards themselves. The main reason for this is the adequate return on the investment in it. NSCs are available almost is all post offices. The other investments having straight competition with the NSCs available in the market are Shares and Mutual Funds. But this scheme occupies the leading position in the race on account of government guarantee, tax benefit, and adequate income.

Advantages of National Saving Certificates schemes:

The main advantages of this scheme are the following:

(1) Tax Benefit: Under section 80C of the Income Tax Act tax benefit is available on the investment made in the NSCs.

(2) Reinvestment Benefit: The earned interest on the NSCs in one year is taken as an investment for the following year and the Tax benefit is obtained on it under section 80C. This benefit is obtained up to the first four years. Because of the maturity of the NSCs at the end of the fifth year, reinvestment of the interest earned during that year is not possible. This is the reason that this benefit is not available on the interest earned during the final year.

(3)  Zero Risk Benefit: Because of the guarantee of the Government of India available on this investment, this investment is regarded as risk-free.

(4)  Sufficient Income Benefit: The income on this investment is much more than the income to be obtained on the other investment of this category.

(5)  Transferability Facility: The transferability facility of NSCs from the name of one person to the name of another person is available. Similarly, they can be got transferred from one post office to another post office.

  • Kisan Vikas Patra - KVP 

'Kisan Vikas Patra' is such a saving scheme of the government of India as doubles the amount invested in it in a period of 8 years and 7 months. This scheme has been started by the Directorate of small savings of the government of India.
The main objective of the scheme is to help the needy farmers. Here the word 'Kisan' in the 'Kisan Vikas Patra' does not imply that only the farmers (Kisan) can invest in KVPs but implies that the government will spend the money collected through the scheme of the welfare of farmers kisan.

NOTE: With effect from 01.12.2011 the 'Kisan Vikas Patra' has been discounted.

Advantages of Kisan Vikas Patra schemes

 The main advantages of this scheme are the following:

(1) Development of Agriculture: The amount obtained from the KVPs is used by the government for providing several facilities to the farmers. Doing so helps in the development of agriculture.

(2) Safe Investment: Since the KVPs are issued by the government, the amount invested in them remains fully safe.

(3) People Do More Savings: The income obtained from the investment made in KVPs is quite enough. therefore, People get attracted to the savings scheme   


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