ELSS v/s NSC

by khalid on 21/06/2010 · 0 comments

v/s

Equity Linked Savings Schemes (ELSS) and National Savings Certificate (NSC) are two investment instruments which both provide the benefit of tax deduction to the investors under Section 80 C.

For the investors who are looking for safety and a guaranteed return, NSC is better than ELSS. As every body knows that NSC gives a fixed return of 8%. Only the drawback of this instrument over the ELSS is its holding period which is 6 years and in case of ELSS it is only 3 years. One more negative point is that maturity amount of NSC is added to your income and taxed accordingly.

However, for the investors who are having the capacity of risk taking ELSS definitely scores over NSC. ELSS is also a superior investment product in terms of holding period and tax benefit. The mandatory investment period for ELSS is just 3 years. When you sell the units of your ELSS after three years, the long-term capital gain is zero. And if market is favorable then you could expect a handsome return for your investment.

SchemesStar Rating3 Year Returns (%)
Canara Robeco Equity Tax Saver ****19.11
Fidelity Tax Advantage****13.68
Franklin India Taxshield ****11.97
HDFC Taxsaver****11.82
Magnum Taxgain ***8.01
Sundaram BNP Paribas Taxsaver****13.77
Category Average 8.28

Rating as on 31st May 2010 & Returns as on 16th June 2010

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