ELSS versus NSC: Which one is Right for You

elss vs nsc which one is right

Earning money is usually not enough to attain stability in life. Savings often play a more important role to determine your future. While there are several ways of earning money, there are only a few ways to save it smartly. And this is why, it is often imperative to select the right savings plan. Equity linked savings schemes (ELSS) and National Savings Certificate (NSC) are two of the most popular savings schemes in the country, both offering their own sets of advantages.

Let’s find out what these two schemes are all about.

ELSS: These are a type of diversified mutual funds that invests the lion’s share of its corpus in equities. ELSS has a three-year lock-in period with various portfolio options that helps in multiplying your money faster.

NSC: These are bonds issued by the government to forge the habit of savings among common people. Certificates can be purchased from post offices. The maturity period is fixed at five and 10 years.

ELSS versus NSC: Differences

The table below demonstrates the difference between ELSS and NSC.


Minimum investment
Maximum investment
Risk factor
Rate of interest
Frequency of interest accumulation
Guarantee of fixed returns
Whether exempted for IT
Tax liability


Rs 1000
No Limit
3 years
High risk, depends on the equity market
No fixed rate of interest
NA, depends on market conditions
Returns are not fixed
Yes, u/s 80C of the IT Act
Amount received at the time of maturity is non-taxable in the hands of the investor


Rs 100
Rs 1 lakh
5 and 10 years
No or negligible risk
8.55% per annum for 5-year term, 8.8% for 10 years
Compounded half-yearly
Yes, u/s 80C of the IT Act
Interest earned is taxable

ELSS versus NSC: Which one to choose?

Both ELSS and NSCs have their own unique features. As an investor, you have to consider your individual requirement before you park your money in a particular scheme. ELSS offers higher returns, but at the same time, it’s subject to market risks. NSCs, on the other hand, gives fixed returns, discounting external factors. If you are open to taking risks and have age on your side, go for ELSS. Some ELSS schemes have known to fetch 25 to 30% return on investments, which appears enticing to the average 8% interest offered by NSCs. But if you want more security and stability of returns, NSCs could be ideal for you.

Similarly, your investment horizon is another important factor. ELSS has a three-year lock-in period, compared to six years for NSCs. It allows you to select a scheme depending on your requirements, either long term or short term goals.

At Capitalworx, we recommend investors to take the SIP route while investing in ELSS. You can invest amounts according to your financial condition, starting from a minimum of Rs 1000. NSCs, on their part, have a low threshold investment of Rs 100. It’s ideal for people with limited income.

The final decision to invest in a particular savings scheme boils down to individual preferences. Sit down and sort your thoughts on what exactly are your investment goals. Give us a call if you have any doubts.

Click here to start investing online

ELSS versus NSC: Which one is Right for You
Scroll to top