ELSS vs National Savings Certificate (NSC)

NSC is a scheme launched by the Government of India. It is a fixed income earning instrument and the interest rates are almost at par with other Government tax savings instruments. NSC is compounded half yearly and the interest rates are declared annually. The current rate of interest is 8.5% compounded half yearly for an investment period of five years and 8.8% compounded half yearly for an investment period of ten years. The major disadvantage of NSC over ELSS is the tax treatment of interest earned. The interest earned in NSC is taxable and for this purpose it is reinvested as the reinvestment within the one lakh limit is not taxable. ELSS does not come with any such tax clause.