Kisan Vikas Patra- KVP

Kisan Vikas Patra  

Launched in the year 1988 by Indian Post, Kisan Vikas Patra is a savings certificate scheme. This is a government-initiated scheme with an objective to boost small savings in the country to provide a secure future to the investors.

Kisan Vikas Patra is a saving scheme, which allows investors to invest in the long-term. The scheme offers a tenure of 9 years & 10 months (118 Months) to the investors. Initially, KVP was launched specifically for the farmer to encourage them to save for the long-term, but now it can be availed by all. However, in the year 2014, Kisan Vikas Patra was relaunched by the government, wherein the government made it compulsory to submit PAN card proof for the investments above 50,000 and income proof for investment above Rs.10 Lakh in order to avert the possibilities of money laundering.

The major benefit of investing in KVP its ease of process and availability. Kisan Vikas Patra certificates can be issued in any post-office around the country. Any individual residing in India can make an investment in the KVP scheme and can get a certificate either individually or jointly in the name of a minor. Let’s look at the type of certificates available under the KVP scheme.

Type of Certificates Available

Following are the types of certificate available under KVP:

1. Single holder type certificate- This type of certificate is allotted to a single person for self or on behalf of a minor or to a minor.
2. Joint type (A) certificate- As the name suggests this type of certificates are allotted jointly to two individuals and the benefits are offered to both the account holder or to the survivor.
3. Joint type (B) certificate- Type (B) certificates are allotted jointly to two individuals and the benefits are payable either of the holder or to the nominee.

Further here, we have discussed briefly everything you need to know about Kisan Vikas Patra.

Kisan Vikas Patra Interest Rate  

For the financial year 2019-20, KVP offers an interest rate of 7.7%, the Kisan Vikas Patra interest rates are set by the government on a quarterly basis and is compounded annually. Let’s take a look at the KVP interest rate of this year and previous years.

Quarter/Financial Year	2015-2016	2016-2017	2017-2018	2018-2019	2019-2020
April-June	8.7%	7.8% (Maturity tenure is 110 months)	7.6% (Maturity tenure is 113 months)	7.3% (Maturity tenure is 118 months)	7.7% (Maturity tenure is 112 months)
July-September	8.7%	7.8% (Maturity tenure is 110 months)	7.5% (Maturity tenure is 115 months)	7.3% (Maturity tenure is 118 months)	7.6% (Maturity tenure is 113 months)
October-December	8.7%	7.7% (Maturity tenure is 112 months)	7.5% (Maturity tenure is 115 months)	7.7% (Maturity tenure is 112 months)	7.6% (Maturity tenure is 113 months)
January-March	8.7%	7.7% (Maturity tenure is 112 months)	7.3% (Maturity tenure is 118 months)	7.7% (Maturity tenure is 112 months)	7.6% (Maturity tenure is 113 months)

Eligibility Criteria to Apply for Kisan Vikas Patra  

Following are the eligibility criteria to invest in KVP scheme:

1. The applicant must be above the age of 18 years.
2. The applicant must be a citizen of India.
3. KVP cannot be purchase by a minor. However, an individual above the age of 18 years can purchase KVP certificates on behalf of a minor.
4. Under different types of certificates, Kisan Vikas Patra can be purchased on behalf of a minor, in the name of the applicant or jointly by two individuals.
5. KVP can be purchased by a trust.
6. NRIs (Non-Residents of India) and Hindu Undivided Family (HUF) are not eligible to invest in KVP.

Kisan Vikas Patra: Features and Benefits  

As a government-sponsored savings scheme, KVP is considered as one of the safest options of investment available in the market. Along with the benefit of the high KVP interest rate, there are many other benefits of investing in Kisan Vikas Patra. Let’s look at it in detail.

Guaranteed Return  

As a government-sponsored savings scheme, KVP guarantees a high return on investment over a long-term period. This means that the account holder is guaranteed to receive the accumulated fund as maturity benefit at the end of the scheme tenure.

Financial Protection  

Kisan Vikas Patra is one of the safest options of investment and is not subjected to market risks. By investing a minimum amount of Rs.1000, the investors can accumulate a corpus for the long-term and ensure financial security in the future. The certificates of KVP are available in denominations Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. However, there is no upper limit on the maximum amount of investment.

Interest Rate  

The interest rates of KVP are set by the government of India and are regulated on a quarterly basis. The effective rate of interest of the KVP scheme varies on the basis of the tenure of KVP chosen at the time of purchase.  The current Kisan Vikas Patra interest rate is 7.7% and the interest applicable to the invested amount is compounded annually.

Tenure  

The scheme offers a tenure of 9 years & 10 months (118 Months) to the investors. The principal amount invested in Kisan Vikas Patra is doubled in 112 months i.e. 9 years & 4 months. Once the tenure of the scheme is completed the account holder can withdraw the money. Moreover, the interest will continue to accrue on the accumulated amount, till the time the account holder withdraws the money.

Taxation  

The Kisan Vikas Patra does not come Under Section 80C tax deduction, thus, the returns offered by the scheme are completely taxable. However, after completion of the maturity period, the TDS (Tax deducted at source) is exempted from the withdrawal amount.

Premature Withdrawal  

Even though Kisan Vikas Patra comes with a lock-in period of 2 years & 6 months, the withdrawal of the amount is allowed only after the completion of 118 months. The scheme does not allow pre-mature withdrawal. However, in certain cases like the unfortunate demise of the account holder or court order, pre-mature withdrawal is applicable.

Loan Facility Against KVP  

An individual can use the Kisan Vikas Patra certificate as security or collateral to avail of a secured loan. However, the interest rate applicable in such a loan is comparatively low.

Nomination Facility  

KVP offers a very simple and hassle-free facility to nominate a nominee. The subscriber just needs to collect a nomination form from the post-office and fill it thoroughly. In case the nominee is a minor, then the account holder will require to submit the birth certificate and mention the date of birth of the minor.

Classification- KVP   

What are the Documents Required to get Kisan Vikas Patra Certificates?    

The applicant must keep handy a copy of the following documents to get Kisan Vikas Patra certificates.

1. Identification Proof (Aadhaar card, voter ID, PAN, Passport, driving license) for the process of KYC.
2. Thoroughly filled the KVP application form.
3. Date of Birth certificate
4. Address Proof

Steps to Invest in Kisan Vikas Patra   

The process of investment in Kisan Vikas Patra is very simple. One just needs to follow a few simple steps to do so. Let’s take a look at it:

Step1- The applicant will require to collect the application form, Form A from the post-office and fill it with all the required information.

Step2- After filling all the information, submit the thoroughly filled form to the bank or post-office.

Step 3- The applicant will also require to submit the important documents like address proof and identity proof along with the application form to complete the process of KYC.

Step 4- After the verification of the documents, the applicant can make the deposits. The deposits can be made through cash, demand draft, cheque in the favor of postmaster.

Step 5- The applicant will receive the KVP certificate through the mail after making the payment. It is important to keep the certificate carefully as the applicant will need to submit it at the time of withdrawal. 

Encashment of Kisan Vikas Patra    

In case, the investor wants to encash the Kisan Vikas Patra certificate, then he/she can do so at the same post-office from where it was issued. If the investor wants to encash it at a different post-office, then he/she will have to complete some formalities. To encash the Kisan Vikas Patra certificate, the account holder will require to submit the identity slip, which was offered while purchasing the KVP certificate. For the encashment of the KVP certificate, the investor will have to submit a letter in writing along with the identity slip to the post-office.

Rules and Guidelines of Kisan Vikas Patra     

After the relaunch of the KVP  scheme in the year 2014, a specified set of guidelines and rules has been set by the Government of India for the same. Let’s take a look at the rules and guidelines of KVP as set by the government.

• Title and commencement – All the rules set by the government for KVP will be known as ‘Kisan Vikas Patra Rules, 2014’ and will be in force from the day they are issued in the Official Gazette.
• Certificates denomination- The certificates of KVP will be given in denomination of Rs.1,000, Rs.5000, Rs. 10,000 and Rs.50,000.
• The application process of KVP will remain the same as that of the Post Office savings schemes Certificate Rules,1960.
• The investors can buy any number of Kisan Vikas Patra certificate of the denominations mentioned above.
• The issuance of the certificate is made immediately after the payment. The date of the certificate issue remains the same as the date of payment. In case the KVP certificate is not issued immediately due to any reason, then a provisional letter is given to the applicant, which can be exchanged later for a certificate.
• To purchase a KVP certificate, the applicant needs to visit the post-office and submit the application form. The payment of these certificates can be done through cash, cheque and demand draft in the name of the postmaster.
• The account holder can transfer the KVP certificate by sending a letter of request to the postmaster for the same. The following are the conditions under which the transfer of certificate is allowed.
  1. From the name of the demised account holder to their beneficiary.
  2. From a single account holder to the name of the joint account holder.
  3. From an account holder to the court of law or another person under the orders of a court of law
• The account holder can make any person the beneficiary of the scheme who will be entitled to hold the KVP certificate after the demise of the him/her. The accumulated fund will be given to the nominee after the completion of the maturity period of the scheme.
• If the repayment of accumulated fund inclusive of interest has not been made then the interest on the due amount is applicable under the following cases:
  1. The interest applicable will be simple interest and will be computed at the ongoing applicable rate of interest.
  2. The account holder can receive the interest amount as lump-sum at the time of withdrawal of the due amount.
• In case the KVP certificate is lost destroyed or damaged by the account holder, then he/she can apply for a duplicate copy of it at the post-office from where the certificate was issued. The application should include information such as amount, certificate number, explanation of loss or destruction and date. One can use the reissued duplicate certificate as the original certificate. However, it will not be encashable without prior verification.

How to Transfer Kisan Vikas Patra Certificate from One Person to Another?     

The account holder will require to submit a written application at the registered post-office for the transfer of the KVP certificate from one person to another. The transfer of the KVP certificate is allowed in the following cases.

1. Transfer of KVP certificate of a demised person to his/her heir.
2. From single account holder to joint account holder.
3. From joint account holder to single account holder
4. From an account holder to the court of law or another person under the orders of a court of law.

What is the Online Process to Transfer KVP Certificate    

For the convenience of the accountholders, the Department of Indian Post has allowed access to transfer the KVP certificate from one post-office to another.

To start the transfer process from the registered post-office to any other post-office, the subscribers are required to fill Form B of KVP transfer and submit it along with the obligatory documents at the registered post-office.

Documents Needed for the transfer of KVP post-office.    

Here is the list of documents that are needed for the KVP post-office transfer.

1. Identity proof (PAN Card/ Aadhaar Card/ Voter ID/Passport/Driving Licence)
2. Thoroughly filled and attested Form B
3. Address proof ( Aadhaar Card/ Voter ID/Passport/Driving Licence)
4. Original KVP certificate
5. Application confirming the transfer, signed by the subscriber.

Loan Against KVP   

A subscriber of a KVP certificate can avail loans against the scheme. Let’s take a look at the conditions for availing loans against Kisan Vikas Patra.

1. The loan can be taken in the name of the account holder.
2. The loan taken against KVP can be used only for personal or business purposes.
3. The account holder cannot apply for a loan for any speculative purpose.
4. Different banks and post-office offer different interest rates and charges on loans for KVP.
5. The charges applicable for a loan varies from time to time. Moreover, some banks can also charge processing fees to sanction the loan.
6. The applicant needs to repay the loan within the tenure of KVP.
7. Based on the investment in KVP and maturity of the certificate, the loan amount and margin is decided by the bank.

FAQs- Kisan Vikas Patra (KVP)

Q1. Can the post-office issue a duplicate KVP certificate? 

Ans- In case the KVP certificate is lost destroyed or damaged by the account holder, then he/she can apply for a duplicate copy of it at the post-office from where the certificate was issued. The application should include information such as amount, certificate number, explanation of loss or destruction and date. One can use the reissued duplicate certificate as the original certificate. However, it will not be encashable without prior verification.

Q2. Can NRIs invest in Kisan Vikas Patra?  

Ans- No, NRIs are not eligible to purchase the KVP certificate.

Q3. Does KVP offer any tax benefit? 

Ans- The Kisan Vikas Patra does not come Under Section 80C tax deduction, thus, the returns offered by the scheme are completely taxable. However, after completion of the maturity period, the TDS (Tax deducted at source) is exempted from the withdrawal amount.

Q4.  What are the minimum and maximum investment limits in the KVP scheme?  

Ans- The certificates of KVP are available in denominations Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum limit of investment in the KVP scheme is Rs.1000, however, there is no upper limit on the maximum amount of investment.

Q5. Is the old KVP certificate is valid even after transferring the certificate to another person? 

Ans- No, once the transfer of the KVP certificate is done successfully, a new certificate is issued in the name of the transferee. However, the date of issue of the certificate remains the same as the original certificate,