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Kisan Vikas Patra is a certificate scheme from the Indian post office. It doubles a one-time investment in a period of approximately 10 years & 4 months (124 months). For instance, a Kisan Vikas Patra for Rs. 5000 will get you a corpus of Rs. 10,000 postmaturity. In this article, we will explore the features and potential of this scheme.
India Post introduced the Kisan Vikas Patra as a small saving certificate scheme in 1988. Its primary objective is to encourage long-term financial discipline in people. As per the latest update, the tenure for the scheme is now 124 months (10 years & 4 months).
The minimum investment amount is Rs. 1000 and there is no upper limit. And if you invest a lump sum amount today, you can get double the amount at the end of the 124th month. Initially, it was meant for farmers to enable them to save for the long term, hence the name. Now it is available for all.
To prevent the possibility of money laundering, the government in 2014 made PAN Card proof compulsory for investments above Rs. 50,000. To deposit Rs. 10 lakhs and above, you must submit income proofs (salary slips, bank statements, ITR documents etc.).
It is a low-risk savings platform, where you can safely park your money for a certain period. Further, it is also mandatory to submit the Aadhaar number as proof of identity of the account holder
A Kisan Vikas Patra certificate can be of the following types:
The following are eligible for investing KVP:
Any Indian citizen above the age of 18 years can buy a Kisan Vikas Patra from the nearest post office. People from rural India (with no bank account) find this particularly appealing. You can also buy a KVP for a minor or jointly with another adult. Don’t forget to mention the date of birth of the minor and the name of the parent/guardian. A Trust can also buy one, but not an HUF or an NRI.
KVP is a good choice for risk averse individuals, who have surplus money, which they may not require in the near future. It all depends on your risk profile and goals.
For instance, people seeking tax-saving schemes have better options like Public Provident Fund, National Saving Certificates and tax saving bank FD Schemes. If you are open to some level of risk exposure, you have the Equity Linked Savings Scheme (ELSS). Hence, play to your financial strengths.
Regardless of the market fluctuations, you will get the sum guaranteed. As this scheme was originally intended for the farming community, the priority was to encourage them to save for rainy days.
It is a safe mode of investment and not subject to market risks. You will receive the investment and gains when the tenure ends.
The effective interest rate for Kisan Vikas patra varies depending on the number of years invested in KVP at the time of purchase. The current interest rate is 6.9% p.a. for the Q2 FY 2022-23, i.e. quarter starting from 1 July 2022 to 30 September 2022, compounded yearly. By compounding the interest, you will receive more returns on your deposit.
The maturity period for Kisan Vikas Patra is 124 months and you can avail the corpus then. The maturity proceeds of KVP will continue to accrue interest till you withdraw the amount.
Though the account matures after 124 months, the lock-in period is 30 months. Encashing the scheme early is not allowed, unless in the account holder’s demise or court order.
KVP is available in denominations of Rs. 1000, Rs. 5000, Rs. 10,000 and also Rs. 50,000 for investment. There is no maximum limit. Please note that denominations of Rs. 50,000 are available only at the head post office of a city.
You can use your KVP certificate as collateral or security to avail secured loans. The interest rate is comparatively lesser for such loans.
Collect a nomination form from the post office, and fill up the required information of the nominee. If you are nominating a minor, mention the date of birth.
If payment is done through cash, they issue the KVP Certificate on the spot. And for Cheque, Demand Draft or Money Order, you will have to wait till the amount is cleared to the post office.
This includes the Kisan Vikas Patra Certificate, the KVP serial number, the amount, the maturity date and the amount to be received on the date of maturity.
KVP is a low-risk scheme. 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|
|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)||6.9% (will mature in 124 months)|
|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
Investing in Kisan Vikas Patra is simple, as mentioned below.
Step 1: Collect the application form, Form A, and fill the form with the necessary information.
Step 2: Submit the duly filled form to the post office or bank.
Step 3: If the investment in KVP is through an agent, then the agent should fill Form A1. You can also download these forms online.
Step 4: The Know Your Customer (KYC) process is mandatory and you need to submit the ID and address proof copy (PAN, Aadhaar, Voter’s ID, Driver’s License, or Passport).
Step 5: Once the documents are verified, you must make the deposit. The payment can be made by cash, locally executed cheque, pay order, demand draft drawn in the favour of the postmaster.
Step 6: You will get a KVP certificate immediately unless you make payment by cheque, pay order, or demand draft. Keep this safe as you will need to submit this at the time of maturity. You can also request them to send you the certificate by email.
In short, if Kisan Vikas Patra seems like a worthwhile investment that matches your financial goals, invest immediately. It is easy enough to open and manage. All you need to do is have the amount ready and pay one visit to the nearest post office.
Single holders or joint holders of a certificate can make a nomination by filling up the details in Form C at the time of purchase. You can nominate any person so that the nominee will be entitled to the benefits of the certificate in the event of the death of the single holder or both the joint holders.
If the nomination is not made at the time of purchase, the single holder, joint holders, or the surviving joint holder can make a nomination at any time after the purchase of the certificate but before the maturity by submitting the duly filled Form C. Submit it to the postmaster or bank officer where the certificate is registered.
However, no nomination can be made if the certificate is applied for and held by or on behalf of a minor. If a nomination is made in this case by the holder or holders of the certificate will be cancelled or altered using Form D.
When you have more than one certificate registered on different dates, you have to make separate applications for the nomination, cancellation of the nomination, or variation of the nomination. Such an application will be effective from the date of its registration and will be noted on the certificate. Nominations made for the first time is free-of-cost. Subsequent nominations or cancellation will be charged at Rs.20 per application.
KVP customer care number – 1800 266 6868
Yes, your certificate can be transferred from post office/bank to any other post office/bank by submitting an application via Form B either at your post office or bank. The application must be signed by the holder or holders, except for Joint ‘A’ type certificates where one of the joint account holders can sign the application if the other is dead.
A certificate can be transferred from one person to another with the consent of an officer of the post office or bank in the following cases:
Further, an authorised postmaster or bank officer will give consent to the transfer only if the following conditions are satisfied:
No transfer is possible with respect to a certificate held by or on behalf of a minor until the minor is alive.
No, upon successful transfer, a new certificate will be made available with the same issue date as the original certificate but in the name of the transferee.
Your investment in KVP will be doubled within a period of 124 months, i.e. 10 years and four months.
KVP doesn’t come under the 80C deductions, thus the returns are completely taxable. However, withdrawals made after the maturity of the scheme are exempt from Tax Deducted at Source (TDS).
Upon maturity of the scheme, the payable amount shall be credited directly to the bank/post office savings account of the certificate holder. Thus, encashment of KVP can be processed from the same post office/bank from which it was issued. The identity slip allocated to you at the time of issue must be submitted while encashment.
The online process to buy KVP is as follows:
KVP can be encashed at any Post Office if your identity slip is accepted and if it is confirmed by the Post Office that you started KVP. Ideally, it would be a lot easier for you if you could encash your KVP at the Post Office of issue.
In case the KVP certificate is not encashed after it reaches maturity, then you will be entitled to the post office savings interest, at the rate applicable on the entire payable maturity amount, at the given time. If the certificate is encashed within a month after maturity of the scheme, no interest shall be paid.
Yes. KVP is taxable upon maturity. There is no tax benefit under this scheme. The interests accrued are taxable under ‘income from other sources’, paid every year.
Ans. The interests on KVP are taxable on accrual basis every financial year and tax is applied on the same as ‘Income from other sources’.