Kisan Vikas Patra – Eligibility, Benefits & Interest rates

Kisan Vikas Patra – Eligibility, Benefits & Interest rates

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) according to the latest update. The scheme is designed to encourage long-term investment and savings amongst the masses. It is suitable for investors who are reluctant to risk taking, have surplus money and are looking for assured returns. With an effective interest rate of 6.9% (for Q1 of FY2019-20), Kisan Vikas Patra is a popular investment instrument given its low-risk and guaranteed returns. Interest is compounded annually. The minimum investment is Rs. 1000 and there is no upper limit. However, premature withdrawal can be allowed after 30 months. 

What is Kisan Vikas Patra?

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) if you purchase the certificate between 1 April 2020 and 30 June 2020. The minimum investment is Rs. 1000 and there is no upper limit. And if you invest a lump sum 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 long-term, and hence the name. Now it is available for all. To prevent the possibilities of money laundering, the 2014 government 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 statement, ITR document 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 AADHAAR number as proof of identity of account holder.

Types of Certificates Available

A Kisan Vikas Patra certificate can be of the following types:

  • Single Holder Type Certificate: This kind of certificate is issued to an adult for self or on behalf of a minor or to a minor.
  • Joint ‘A’ Type Certificate: This type of certificate is issued jointly to two adults, payable to both the holders jointly or to the survivor.
  • Joint ‘B’ Type Certificate: This type of certificate is issued jointly to two adults, payable to either of the holders or to the survivor.

Kisan Vikas Patra Eligibility

  • The applicant must be an adult and a resident Indian.
  • The applicant can apply for Kisan Vikas Patra in their own name or on behalf of a minor.
  • Trusts are eligible to invest in Kisan Vikas Patra. HUFs (Hindu Undivided Family) and NRIs are not eligible to invest in KVP.

How to Apply for Kisan Vikas Patra Online

The process to invest in the Kisan Vikas Patra online scheme is simple. The steps mentioned below can be followed:

  • You must obtain the KVP application form i.e. Form-A, from the post office.
  • Furnish all the relevant details on the form and submit it at the post office.
  • In case the investment is being made with the help of an agent, a second form will be required to be filled up and submitted. The agent must fill in Form-A1.
  • Both the forms i.e. Form-A and Form-A1 are available for download on the official website as well. The forms can be downloaded online, filled up, and submitted.
  • You will be required to furnish a copy of one of your identity proofs for the Know-Your-Customer (KYC) process. You can use one of the following documents – Aadhaar Card, Driving Licence, Passport, Voter ID Card, or PAN Card.

Note: Your KVP Certificate will be issued once the documents provided by you are verified and the necessary deposits are made. You can also opt to receive the KVP Certificate through email. In that case, the certificate will be sent to you on the registered email ID.

Documents Required

 ID and address proof copy (PAN, Aadhaar, Voter’s ID, Driver’s License, or Passport)

Kisan Vikas Patra Interest Rate

The current interest rate was reduced from 7.6% to 6.9%. The maturity period was also increased from 113 months to 124 months. The principal amount can be withdrawn after this period only.

Kisan Vikas Patra Maturity Period

The maturity period for Kisan Vikas Patra that was introduced in 2014 is 8 years and 4 months. On maturity, the amount invested gets doubled. If you invest an amount of Rs.10,000, after a period of 8 years and 4 months, the amount will increase to Rs.20,000. The current interest rate of Kisan Vikas Patra was reduced from 7.6% to 6.9%. Therefore, the invested amount will double in 9 years and 5 months to 10 years and 3 months (i.e. 113 months to 124 months) for Q1 of FY 2020-21.

The following are the historical interest rates offered by the Kisan Vikas Patra scheme

Time PeriodInterest Rate of KVP
Q1 FY 2020-216.9%(maturity in 113 months)
Q4 FY 2019-207.6%(maturity in 113 months)
Q2 FY 2019–207.6%(maturity in 113 months)
Q1 FY 2019–207.7%(maturity in 112 months)
Q4 FY 2018-197.7%(maturity in 112 months)
Q3 FY 2018-197.7%(maturity in 112 months)
Q2 FY 2018-197.3%(maturity in 118 months)
Q1 FY 2018-197.3%(maturity in 118 months)

Note: Principal has compounded annually

How KVP Doubles the Money 

Here is an example of how interest accrues and doubles at maturity upon investment of Rs.1,000 in KVP.

Encashment AfterAmount to be Received (Including Interest)
2.6 yrs but less than 3 yrsRs.1,176
3 yrs but less than 3.6 yrsRs.1,215
3.6 yrs but less than 4 yrsRs.1,255
4 yrs but less than 4.6 yrsRs.1,296
4.6 yrs but less than 5 yrsRs.1,339
5 yrs but less than 5.6 yrsRs.1,383
5.6 yrs but less than 6 yrsRs.1,429
6 yrs but less than 6.6 yrsRs.1,476
6.6 yrs but less than 7 yrsRs.1,524
7yrs but less than 7.6 yrsRs.1,575
7.6 yrs but less than 8 yrsRs.1,626
8 yrs but before 8.6 yrsRs.1,680
8.6 yrs but less than 9 yrsRs.1,735
9 yrs but before maturityRs.1,793
On maturityRs. 2,000

Kisan Vikas Patra Form

In order to purchase a Kisan Vikas Patra certificate, one must fill in the application form and furnish the required information. The required information must be provided in the identity slip also. In the application form, you will be required to mention the following details:

  • The amount for which KVP certificate is to be purchased.
  • The method of payment which can be either cash or cheque
  • Type of KVP certificate, whether it is single or joint “A” or joint “B”
  • The name of combined owners if KVP type is not single
  • In case of minor, the date of birth of the minor and his guardian who can encash KVP amount
  • Name of all nominees with full address and date of birth

This form must be duly signed by the investor. The date, address, and signature of witness to nomination will also be specified in the slip.

In the identity slip, information like the serial number of KVP certificate, issue price, date of encashment, and postmaster signature and remarks like that of duplicate issue and transfer will be mentioned. To encash the KVP, one must present the identity slip. Hence, mentioning the right details in KVP identity slip and KVP Form is of utmost importance.

Nomination

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 are free-of-cost. Subsequent nominations or cancellation will be charged at Rs.20 per application.

How to Transfer Kisan Vikas Patra Post Office Online?

For the convenience of subscribers, the Department of Posts, India has granted access to transfer of certificates from one post office to another. 

To initiate the transfer from the registered post office to any other post office, the account holder must fill the KVP Transfer Form-B and submit it along with all the required documents at the registered Post Office:

Download here KVP-Form B 

Features & Benefits of Kisan Vikas Patra 

Guaranteed Returns

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.

Capital Protection

It is a safe mode of investment and not subject to market risks. You will receive the investment and gains when the tenure ends.

Interest

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 7.7% for the quarter 1 October 2018 to 31 December 2018 prior to which the rate was 7.3%, compounded yearly. By compounding the interest, you will receive more returns on your deposit.

Tenure

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.

Taxation

It doesn’t come under the 80C deductions, and the returns are completely taxable. However, Tax Deducted at Source (TDS) is exempt from withdrawals after the maturity period.

Rules to Premature Withdrawal

You can withdraw the amount after 124 months. But the lock-in period is 30 months. Encashing the scheme early is not allowed, unless in the account holder’s demise or court order.

Ease & Affordability

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.

Loan Against KVP Certificate

You can use your KVP certificate as collateral or security to avail secured loans. The interest rate is comparatively lesser for such loans.

Nomination facility

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.

KVP Certificate Issuance

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.

KVP Identity Slip

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.

Q. Can the Post Office issue a Duplicate Kisan Vikas Patra ?

A.In the event of a loss, mutilated, defaced, or stolen KVP certificate, the buyer can apply for a duplicate KVP certificate. To do this, the investor has to provide the identity slip provided to him/her at the time of issue of the original certificate.

Q. Can Kisan Vikas Patra be Encashed Only at the Issuer Post Office?

A.KVP certificates can be easily encashed at the issuer post office. In case of an emergency, the buyer can encash it through other post offices as well. However, the buyer has to produce the identity slip along with the KVP certificate at the time of encashment.

Q. Are Co-operative Banks/Co-operative Societies Permitted to Invest in Kisan Vikas Patra?

A.According to rule 6 of Kisan Vikas Patra, co-operative banks and cooperative societies are not permitted to invest in this scheme.

Q. Can Kisan Vikas Patra be Purchased by Non-Resident Indians?

A.NRIs are not eligible to purchase KVP certificates.

Q. Can Kisan Vikas Patra be Purchased by the ‘Karta’ on behalf of a Hindu Undivided Family (HUF)?

A.There is no provision in the rules for purchase of a Kisan Vikas Patra by the ‘Karta’ on behalf of a HUF.

Q.How to transfer KVP Account?

A.KVP can be transferred from one Post Office to another or from one person to another. In case of transfer from one Post office to another, a set of forms need to be submitted to the Post’s Director General. On the other hand, in case of transfer from one person to another, an application referring to the same needs to be published.

Q. Is Kisan Vikas Patra interest taxable?

A.The interests on KVP are taxable on an accrual basis every financial year and tax is applied on the same as ‘Income from other sources’.

Q. Who should apply for Kisan Vikas Patra?

A.The individuals looking for a saving scheme which gives them 100% security, long-term savings, fixed rate of interest and collateral for loan should apply for Kisan Vikas Patra.

Q. How to encash KVP?

A.The encashment of KVP can be processed from the same post office from which it was issued. If the subscriber wants to encash it from some other post office, certain formalities and applicants need to be completed. The identity slip allocated to the subscriber at the time of issue must be submitted while encashment. Also, the same process is carried out in case of premature encashment.

Q. What is the tax benefit for investing in the Kisan Vikas Patra Scheme?

A.There is no tax benefit under this scheme. KVP is not suitable for individuals looking out for tax-saving schemes. The interests accrued are taxable under ‘income from other sources, paid every year. However, the final maturity is exempted from tax deductions.

Q. What is the maximum investment limit in Kisan Vikas Patra?

A.KVP certificate can be issued in the following denominations- Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000. But, if an individual wants to invest more than Rs.50,000 in the scheme, he/she must submit the PAN card to curb misuse. Hence, there is no maximum limit to investments in the KVP scheme

Q. Can NRIs avail KVP Certificate?

A.Non-Resident Indian’s (NRIs) cannot purchase KVP certificates and apply in the scheme.

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