Here’s the argument for both of them:
ELSS funds have a short lock-in period of three years, the shortest among all tax-saving investments, and have the potential to yield high returns compared to other options under Section 80C. ELSS holds its ground, even with its returns being taxed, with higher post-tax returns than any other Section 80C investment options including PPFs & ULIPS, but it comes with risks as it exposes you to the equity market.
Under Section 80C of the Income Tax Act, individuals can claim a tax deduction of up to ₹1.5 lakh per financial year on the principal amount invested in NSC. But, it’s important to note that while the principal amount invested in NSC is tax-free up to the specified limit, the interest earned on NSC is taxable.
ELSS suits those seeking higher returns with higher risk tolerance, while NSC offers stability and guaranteed returns for risk-averse investors. ELSS, with a 3-year lock-in, suits short-term goals, while NSC, with a 5-year lock-in, caters to long-term objectives.
What are your goals and which investment suits your needs is a question only you can answer!
Tell us in the comments if you have any other questions and we’ll see you in the next one...
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