Savings are a crucial element of each economy; thus, to stimulate this sector and make Indians save for the future, the government offers saving programs. At present, the two most commonly utilized schemes are the National Savings Certificate (NSC) and the Sukanya Samriddhi Yojana (SSY).
To sum up, one may conclude that the two schemes, though having their specific features, strengths, and customers, are quite appropriate for nowadays conditions. The understanding of these differences can help one choose where to put his/ her money to get the scheme’s returns.
For those interested in returns, a NSC calculator can be used. Therefore, for an improved understanding of the topic, this article will also briefly describe the NSC and Sukanya Samriddhi Yojana.Â
National Savings Certificate (NSC)
A National Saving Certificate is an investment plan of fixed earnings that can be taken by using you by way of establishing an account with the post office affiliated with India.Â
Eligibility: Being a resident Indian, one can invest in NSC.
Investment Limit: An important note to make here is that there is no limit to the total amount of NSC one can invest in.Â
Interest Rate: The rate of interest payable on NSC is a government-decided rate, which is changed every quarter. The interest is calculated annually, but the interest is earned only on the due date.
Tenure: Its operational time scale is 5 years, though amendments can be made from time to time.
Tax Benefits: The actual price or stock of a bond that is issued is an expense and the quantum that is expendable under Section 80C of the IT Act can be for investment behind a bond. However, such an interest earned comes with a condition that it shall be subjected to tax.
Loan Facility: NSC can be encashed with the banks to take the loan facilities Availed.
Sukanya Samriddhi Yojana (SSY)Â
The SSY is a saving scheme that is aimed commonly for the female child to empower her and make parents save for education and marriage.
Eligibility: To open an SSY account, only the parents or legal guardians of a girl child aged 10 years and younger are allowed.
Investment Limit: The minimum deposit of money is INR 250, while the maximum amount being allowed for deposit is INR 1. Rs. 5 lakh per financial year.
Interest Rate: The interest rate is set by the government and is relatively higher compared to other saving products, which are subject to change quarterly.
Tenure: The account becomes mature after 21 years from the opening of the same or on the marriage of the girl after attaining the age of eighteen.
Key Differences
- Target Audience:
The NSC applies to all Indian residents.
SSY is targeted at girl children.
- Interest Rates:
NSC’s interest rate is standardized and declared every quarter.
SSY pays a heftier interest rate that is equally adjusted every quarter.
- Tax Benefits:
Both provide tax exemptions under Section 80-C of the Indian Income Tax Act.
Like any other saving-based instrument, SSY provides tax-free interest and maturity benefits, while in NSC, the interest received is chargeable to tax.Â
- Investment Flexibility:
Unlike ACE, NSC has no restrictions as to the amount of money an ad has to invest.
SSY constrains its payment to a maximum of INR 1.5 lakh per year.
ConclusionÂ
Therefore, there cannot be any particular preference with style as to why one cannot open both accounts and invest in NSC and Sukanya Samriddhi Yojana, or why one is better than the other depending on the financial planning either for self or spouse or children. Well, if what you are looking for is a fairly safe and moderately profitable gilt-edged security associated with tax exemptions then NSC is just about right.
However, if one is saving for the future of his daughter, there’s a higher return, as well as tax exemptions waiting to be claimed in the SSY. Besides this, while deciding whether to invest in the NSC or not, an NSC calculator or SSC or Sukanya Samriddhi Yojana calculator can be of help in ascertaining the amount of return.