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.
Following are the types of certificate available under KVP:
Further here, we have discussed briefly everything you need to know about Kisan Vikas Patra.
Read Also: Post Office 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.
|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)|
Following are the eligibility criteria to invest in KVP scheme:
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.
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.
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.
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.
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.
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.
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.
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.
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.
The applicant must keep handy a copy of the following documents to get Kisan Vikas Patra certificates.
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.
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.
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.
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.
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.
Here is the list of documents that are needed for the KVP post-office transfer.
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.