KVP, PPF, NSC Which is best? Comparison Chart with interest rates


KVP, PPF, NSC Which is best

KVP, PPF, NSC Which is best? Comparison Chart. Check Comparison Chart – KVP, NSC and PPF. Check Compression between KYP, NSC and PPF. There are so many options available for investment. Don’t get confused though. This article will spill out the options, their benefits and drawbacks. So read more on KVP, PPF, NSC Which is best? from below…

KVP, PPF, NSC Which is best? Comparison Chart

The Below mentioned points have been explained in detail below:

 KVP (kisan Vikas Patra)PPF (Public Provident Fund)NSC (National Savings Certificate)
Interest rates6.90%7.10%6.80 ( for 5 years)
Period till maturity8 years 4 months15 years5 years or 10 years
Tax benefit for investing in the instrumentNo tax benefitCovered under Section 80CCovered under section 80C
Tax Benefit at the time of maturityAdditional income in the nature of interest is taxable at the time of maturity.Tax benefit extends to maturity proceeds also, because maturity proceeds are also tax free.Additional income in the nature of interest earned is taxable at the time of maturity.
Taxability with respect to interestTaxableNot taxableTaxable
Minimum Investment requiredRs.1000Rs.100Rs.500 per annum
Maximum Investment thresholdNo such upper cap.Rs.150000 per annumNo such restriction for maximum investment
Lock in period 2 years and 6 months  (The investor can redeem every 6 months after expiry of this lock in period)Premature withdrawl allowed after 6 years but subject to certain condition (refers below in points to remember)Premature withdrawl allowed at any time , but allowed only under certain situations like death of holder , forfeiture of the policy etc
Who can investOnly individuals by themselves or in joint names , can buy the KVP.Only one account allowed to be opened per person.However only individuals can open PPF account.NRI , foreigners and Karta (on behalf of HUF) cant open PPF account.Any other person than Trust and HUF can subscribe to NSC.
Where it is to be openedAt post officeAt any post office or bankAt post office
How they are treated at the time of pledging or taking loanThey can be pledged as security or collateral for obtaining loan from any bank.Loan against PPF account is granted only between 3rd year till 6th year. This makes it clear that no loan can be secured from year 7 because partial withdrawl is allowed from year 7.NSC can be kept as collateral for loan purpose.
TransferKVP are freely transferable and can be transferred any number of times.Funds can be transferred between bank branches or post offices , but no such transfer allowed between other people.As such this instrument is not transferable.Transfer allowed , however name of original owner is still mentioned on the certificateand new owner’s name will be mentioned by rounding off original owner’s name.

Important points to remember

  • KVP also allows premature withdrawl before 2 years and 6 months under certain circumstances like death of the holder or forfeiture etc.
  • In case of PPF, only partial premature withdrawl allowed from year 7. This makes it clear that withdrawl at the time of maturity only could be at full value.
  • Joint accounts are not permissible for Public Provident Fund (PPF) account.
  • Interest rate on KVP is very less, however it is best investment instrument for those who warrant liquidity , risk averse investors. Probable more suitable for rural or semi urban investors who do not have bank facility.
  • EEE (Exempt investment at inception and during the life of instrument till maturity and Exempt maturity proceeds) pattern and high wealth appreciaation due to longer term is attractive.Hence the investors who do not bother about liquidity and are medium risk takers , should opt for PPF.
  • NSC is again high interest , but is in taxable area.So the investors who are below tax threshold and are concerned about liquidity as compared to bank FD , should go for NSC.

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