Please suggest some of the top performing ELSS. Also, do you think that investing in ELSS is more profitable than NSC?
— Vivek Singh
You will get the benefit of a tax deduction under Section 80C of the Income Tax Act in both investments, Equity Linked Savings Schemes (ELSS) and National Savings Certificate (NSC).
If you are looking for safety and a guaranteed return, NSC scores higher in both cases. It offers a fixed return of 8 per cent per annum. However, in terms of returns over the long term, 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, as against 6 years for NSC. When you sell the units of your ELSS after three years, the long-term capital gains is zero. But the returns in NSC are added to your tax slab and taxed accordingly.
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This article was originally published on June 17, 2010.
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