Kisan Vikas Patra (KVP) is a certificate investment scheme launch by the Indian post office. It doubles your investment in 10 years & 4 months (124 months) approximately if you purchase the scheme after April 2020. For instance, Kisan Vikas Patra for Rs 1 lakh will give you a surplus of Rs 2 lakh after maturity.
What is Kisan Vikas Patra?
Kisan Vikas Patra is a small saving certificate scheme introduced by the Indian Post Office in 1988. The purpose of the KVP scheme is to encourage long-term financial habits among individuals. The maturity period of the scheme is 124 months (10 years and 4 months) if you avail of the scheme between 1 April 2020 and 30 June 2020. You can do a minimum of 1000 Rs investment with no maximum limit. If you purchase the scheme now, you will get a double lump sum after the maturity period.
In the initial phase of the scheme, it was meant for farmers to enable them to save for the long term, but now it is available for all the people. To reduce the fraud, the government of India made PAN card proof compulsory, if an investment is above Rs 50,000. In case, if the investment is above Rs 10 lakh and above, an individual has to submit income proofs i.e., salary slips, bank statements, ITR, etc.
Types of Certificates
A Kisan Vikas Patra certificate can be of various types such as:
- Single Holder Type Certificate: This certificate is usually issue to an adult for self-purpose or on the behalf of the minor to his guardian/parent.
- Joint ‘A’ Type Certificate: This certificate is jointly issue to two adults which is payable to both holders jointly or to the survivor.
- Joint ‘B’ Type Certificate: This certificate is jointly issue to two adults, but payable either to the holder or to the survivor.
Who should invest in the KVP scheme?
Any person who is a resident of India (above 18 years) can buy a Kisan Vikas Patra from the nearest post office. The person without any bank account finds some difficulty in this scheme. An individual can also buy one for a minor or jointly with another adult in the form of a Type A or Type B certificate.
It is very necessary to mention the date of birth and name of the parent/guardian in the case of a minor person. This scheme can also avail by the trust but Hindu Undivided Family or Non-Resident Indians are not eligible for this scheme. KVP is considered a good choice for risk-takers, who have surplus money available with them.
Features of KVP
The main features of Kisan Vikas Patra are mention below:
- Guaranteed Returns- Despite the market fluctuations, individuals will get the guaranteed returns. Because this scheme was meant to safeguard the farmers in its initial phase and later on it was used by all individuals.
- Capital Protection: As there are pre-define returns in KVP, it is consider a safe mode of investment with no capital loss.
- Interest: The interest rate for Kisan Vikas Patra varies on the number of years invested in KVP at the time of purchase of the scheme. The current interest rate is 6.9% quarterly start from 1 January 2021 to 31 March 2021. Further, it will grow your returns through compounding.
- Time: The maturity of Kisan Vikas Patra can done within 124 months (10 years 4 months).
- Taxation: The tax rate is applicable on the returns from Kisan Vikas Patra because it does not come under the Section 80C deduction. Moreover, Tax Deduction at Source (TDS) is exempt from withdrawal after the maturity period.
Steps to invest in KVP and required documents
If an individual is looking for Kisan Vikas Patra saving certificate, some necessary steps will followed by him/her very carefully. Failure in any step or document will led to reject the application form the concerned post office. The steps followed are as:
Collect the application form of KVP, Form A and fill in all the necessary details carefully.
After filling the form, submit it to the post office.
If there is an agent between your KPV investments, he/she fill the form A1. If required, you can download these forms online.
Know Your Customer (KYC) is compulsory and you need to submit the ID and address proof copy i.e., (PAN card, Aadhaar Card, Voter’s ID, Passport, or Driving License).
After the verification of documents, you can deposit them in your account. The payment can made in the form of cash, cheque, and demand draft.
After all the above steps, you will get a KVP certificate immediately which includes your basic details and your investment. You have to carefully keep this card safe until maturity.
It is very easy to open and manage the KVP scheme if it manages your financial goals. All you need to visit the nearby post office and fill all the required forms and deposit the amount.
How KVP doubles the money after maturity – an example
KVP is a low-risk scheme. The below table shows the returns over the period for an investment of Rs 1000.
|Time||Amount Repaid (Rs)|
|2.5 years but < 3 years||1154|
|3 years but < 3.5 years||1188|
|3.5 years but < 4 years||1222|
|4 years but < 4.5 years||1258|
|4.5 years but < 5 years||1294|
|5 years but < 5.5 years||1332|
|5.5 years but < 6 years||1371|
|6 years but < 6.5 years||1411|
|6.5 years but < 7 years||1452|
|7 years but < 7.5 years||1494|
|7.5 years but < 8 years||1537|
|8 years but < 8.5 years||1582|
|8.5 years < 9 years||1628|
|9 years < 9.5 years||1675|
|9.5 years < 10 years||1724|
|10 years but before maturity||1774|
|On maturity of certificate||2000|
Historic Interest Rates of KVP
|April-June||7.8% (will mature in 110 months)||7.6% (will mature in 113 months)||7.3% (will mature in 118 months)||7.7% (will mature in 112 months)||6.9% (will mature in 124 months)||6.9% (will mature in 124 months)|
|July-September||7.8% (will mature in 110 months)||7.5% (will mature in 115 months)||7.3% (will mature in 118 months)||7.6% (will mature in 113 months)||6.9% (will mature in 124 months)||Yet to announce|
|October-December||7.7% (will mature in 112 months)||7.5% (will mature in 115 months)||7.7% (will mature in 112 months)||7.6% (will mature in 113 months)||6.9% (will mature in 124 months)||Yet to announce|
|January-March||7.7% (will mature in 112 months)||7.3% (will mature in 118 months)||7.7% (will mature in 112 months)||7.6% (will mature in 113 months)||6.9% (will mature in 124 months)||Yet to announce|
Benefits of KVP
The key benefits which an individual can avail after Kisan Vikas Patra are:
#1 Long-term investment:
With the Kisan Vikas Patra, you can start saving money from a minimum of Rs 1000 and going up to as much as you can. The value is said to double in 124 months (10 years and 4 months). So, the KVP certificate is meant for the long-term purpose only which doubles your investment amount after maturity.
#2 100% secure:
As Kisan Vikas Patra is a government-owned scheme, the returns are fixed and secure. There are no chances of market fluctuation due to a fixed rate of return.
#3 Fixed-rate of return:
The rate of return in Kisan Vikas Patra is fixed irrespective of market risk. This rate of interest ensures double the principal amount in 10 years and 4 months because it is a type of government bond.
#4 Collateral for loan:
The Kisan Vikas Patra certificate can be used as collateral while seeking for loan. All financial institutions accept KVP certificates as collateral before issuing the loan.
The benefit of Kisan Vikas Patra is available only to the certificate holder. Further, it can be transferred d to another name only after the permission of the postmaster and completing all other formalities.
#6 Tax exemption:
There is no tax charge at the time of withdrawal of the money after maturity since it is TDS exempted and paid in full to the holder. The tax is charged only on the accrued interest and exempted from the wealth tax.
Encashment of KVP
If the certificate holder wants to encash the scheme, it is easily done at the post office where the KVP was issued. If in case, individual want encashment at a different office, some formalities are required. To encash the KVP, identity slip and application in written was submitted at the concerned post office.
Under some circumstances, Kisan Vikas Patra can be encashed before its maturity period. The condition is as:
- If ordered by a court of law
- On forfeiture by a pledge
- In case of death of account holder or any of holder in the case of joint KVP.
How to transfer Kisan Vikas Patra Account?
A Kisan Vikas Patra can be transferred from one post office to another post office and from one person to another person.
#1 Transfer from one post office to another:
A Kisan Vikas Patra can be transferred from one post office where it is originally originated to another post office. The account holder has to submit a handwritten application to the postmaster at the concerned post office. The only thing is that the transferee must be a resident of India and eligible for the KVP scheme.
#2 Transfer from one person to another:
A Kisan Vikas Patra can be transfer from one person to another person by submitting a handwritten application at the concerned post office. This transfer is possible under certain circumstances such as:
- Transferred from a deceased person to his/her legal heir (in case of death of holder)
- From one owner to joint owner (in case the certificate is jointly hold)
- Joint owner to the single owner
- From owner to any other person (in the case ordered by a court of law)
Loan facility against Kisan Vikas Patra
A Kisan Vikas Patra certificate holder can also avail loan against the same. The KVP certificate can use as collateral against loans given by financial institutions. The following are the conditions of availing loan against the KVP certificate:
- The loan applicant must have a Kisan Vikas Patra certificate under his/her name or a KVP holder can avail loan against the certificate.
- The loan against KVP will issue against the business or for personal purposes.
- The interest rate for a loan against KVP may vary from bank to bank which is based on the processing fee of the loan.
- The loan must repaid within the tenure of the KVP certificate.
- The loan amount will decide by the concerned bank based on the KVP investment amount and maturity.
Hence, Kisan Vikas Patra offers a variety of benefits. Here the investor has the flexibility to choose the investment option with a minimum investment of Rs 1000 with steady returns. So, the KVP certificate is a good investment avenue that depends on individuals’ financial goals, time horizon, risk profiling, and liquidity capacity.
Frequently Asked Questions
As per the latest amendments in the KVP scheme, the maturity period is 10 years and 4 months (124 months). After this period, the invested amount is doubled after the completion of the scheme tenure.
Interest on KVP is taxable on the accrual basis and will be taxed as income from the other sources because it does not quantify under Section 80C
A Kisan Vikas Patra can be closed before maturity. The principal along with the interest rate can be withdrawn after 2 years and 6 months from the date of issuance which is also the lock-in period.
Yes, it is possible to transfer KVP from the post office or bank to any other post office or bank by applying Form B either at the post office or bank. The application must be signed by the holder or holders (in the case of the joint holder). In case of the death of a holder, the application is signed by another single holder.
Yes, a certificate can be transferred from one person to another person after the consent of the postmaster of the concerned post office.
No, NRIs, HUFs, Co-operative Societies, and Co-operative Banks cannot invest in the KVP scheme. Only the Residents of India Trust are eligible to opt for the KVP scheme. Also, the minor is eligible to invest in KVP, where the application is filled by his/her parents or guardians.