Kisan Vikas Patra Scheme – KVP Scheme Features, Eligibility, Tax Benefits, etc

What is Kisan Vikas Patra?

Kisan Vikas Patra was introduced in the year 1988 as a small saving scheme by India Post. This was mainly introduced to build the habit of saving in people for the long term. The scheme has been amended multiple times, and as per the latest amendment, the tenure of the scheme is 115 months, that is, 9 years and 4 months, and the prevailing interest rate of KVP is 7.5% per annum.

One can invest a minimum of Rs. 1000, and there is no maximum limit on the investment. The investment must be in multiples of Rs 1000. Any amount exceeding Rs.50,000 will need PAN details provided by the city’s head post office. Within the 115-month tenure, the amount invested would double itself, and one can withdraw the same after the tenure ends.

---

How to Purchase Kisan Vikas Patra?

There are two ways to purchase Kisan Vikas Patra, online and offline -

Offline process:

• Step 1: Visit the post office and get Form-A (KVP application form).
• Step 2: Fill out the form with all the necessary and relevant details and submit it.
• Step 3: If you are investing through an agent, you will need to fill out Form-A1 and submit it.
• Step 4: Provide a copy of any of your ID proofs to complete the KYC process.

Once the documents are verified and the required deposits are submitted, then you will receive KVP certificates via email on your registered email ID.

Online Process:

• Step 1: Visit the official website of India Posts or login to your internet banking.
• Step 2: Select Kisan Vikas Patra or (KVP) from the website and download Form A for KVP.
• Step 3: Fill in your personal details, mode of payment, investment amount, and the type of certificate. Once the form is filled, fill in the nomination and submit it to the post office/bank along with all the necessary documents for KYC.
• Step 4: On document verification, make the deposit either in cash, pay order, locally executed cheque, or demand draft drawn in the name of the postmaster.
• Step 5: You will receive a KVP certificate immediately unless you pay by cheque/pay order/demand draft. You can request the executives to send you the certificate over your email address.

---

Features of Kisan Vikas Patra

Kisan Vikas Patra (KVP) is a savings certificate scheme offered by the Government of India that encourages long-term savings while providing a fixed interest rate. Here are some of its features:

• Investment Period: The KVP has a lock-in period that keeps changing from time to time. The current time period of KVP is 115 months. The invested amount doubles at the end of 115 months.
• Denominations: It's available in denominations of Rs. 1,000, Rs. 5,000, Rs. 10,000, and Rs. 50,000.
• Interest Rate: The interest rate for KVP is fixed by the government. It was around 7.5% compounded annually, but rates may vary over time.
• Transferability: KVP certificates can be transferred from one person to another or from one post office to another within the country.
• Taxation: While there's no tax benefit at the time of investment, the interest earned on KVP is taxable. However, the amount withdrawn at the time of maturity is exempt from TDS.
• Maturity: Upon maturity, the certificate holder receives the invested amount along with the accrued interest.
• Nomination Facility: Investors can nominate someone (even a minor) to receive the maturity amount in case of their absence.
• Risk Factor: KVP is a low-risk savings option, as the government backs it.
• Availability: KVPs can be purchased at post offices across India.

---

Who can Purchase Kisan Vikas Patra Certificate?

• Applicants must be Indian residents
• Applicants must be more than 18 years of age.
• Adults can make an application on behalf of a minor

---

What is the Lock-in Period of Withdrawing Amount Invested in Kisan Vikas Patra?

Once the certificate has been issued, one can only encash it after the lock-in period of 2 years and 6 months, which is a total of 30 months. Within this period, the amount cannot be withdrawn unless the person who is the holder of the account dies or gets an order from the court.

---

What is the Interest Amount Earned on KVP?

An Interest amount of KVP depends on the tenure of investment. So, if you have invested for a period of, say 5 years, and within that 5 years, the interest rate doesn’t change, then you will receive the interest amount according to one interest rate. However, interest rates are subject to change, and thus, if the interest rate changes within the tenure of investment, then the interest amount will be calculated according to that. For example, the interest rate now is 7.5% on KVP, but before this amendment, the rate was 7.3%. So, the interest amount was calculated taking into account the 7.3% since the time it was implemented and till the latest amendment. Now, the rate is 7.7%, and the interest amount is calculated taking into account 7.7%. The cumulative interest of all the years the money is invested is paid along with the capital invested once it matures or the person withdraws the amount. Another factor is the interest is compounding interest, so the longer the tenure is, the more interest you would get.

KVP ensures guaranteed returns despite market fluctuations. If one invests in this instrument, he or she can be assured of getting the amount doubled by the end of the tenure. Since it is a government scheme, the risk of losing money is not there. It is a pure risk-free financial instrument. In no circumstances you are going to lose your capital invested in KVP.

Sure, here's a table summarizing the key highlights of Kisan Vikas Patra:

---

When KVP Certificate is Issued and What is its Tenure?

The prevailing tenure of the KVP saving scheme is 115 months. Once you invest in the instrument, the scheme will mature after 9 years and 5 months.

The KVP certificate will be issued instantly if the payment is made in cash. In another scenario, where the payment is made through Demand Draft or cheque, the certificate will be received on clearance of such instrument.

The certificate will include all the details like the amount invested, the date of maturity of the instrument, the amount that will be received on maturity, the serial number of the KVP certificate, and the holder’s details.

---

How Much Amount can be Invested in Kisan Vikas Patra?

The minimum investment amount is Rs 1,000 under the scheme. There Is no restriction on the highest investment that can be made. But the important thing to note here is that if you are investing an amount of more than Rs. 50000 in Kisan Vikas Patra, then, it has to be done in the Head post office. Moreover, any amount invested more than Rs. 50000 has to be done by providing PAN card details.

---

How to Invest in KVP?

To invest in the KVP scheme, you are required to –

• Visit your nearest Post office and take Form A, which is the application form for the scheme, fill it out, and submit it with the necessary details. You can also get the form online, which is downloadable. If you are investing via an agent, then the form would be Form-A1.
• You also need to submit KYC documents like
  PAN, Voter’s ID, Aadhar card, Passport, etc.
• The department will verify the documents, and if everything is approved, then you will be provided the KVP certificate.

---

Who Should Invest in KVP?

As it has been mentioned above, the scheme was formally introduced for the farmers, and later, it was made open to all. So, if you are looking for a financial scheme that offers –

• Risk-free investment
• Good interest rate
• Easy-to-understand scheme
• Protection of Capital, etc

Then you can invest in this scheme, and most importantly, if you are looking for schemes that do not require you to invest a huge amount but you can start with a minimal amount, then this is the right one for you.
But, if you are looking for tax-saving options, better instruments are available, like PPF, NSC, and others.

Want to find out the best tax-saving options for your needs? Check out the Tax planning optimizer tool and maximize your tax savings.

---

Kisan Vikas Patra Premature Withdrawal

The following conditions allow for early withdrawal of a KVP account before two and a half years (2 years and 6 months) have passed since the date of issue:

• The KVP holder or all the account holders in a joint account die
• A pledgee, being a Gazette officer, seizes the account
• A Court of law orders the withdrawal

---

Summary

Kisan Vikas Patra is a saving scheme for all. It opens the investment entry route with a very low amount, which starts from Rs. 1000. There is no limit on the maximum investment, though. The scheme is a government initiative run by Indian Post. You can purchase KVP from any post office across the country, and the process is quite simple. The prevailing interest rate is 7.5%, while the tenure of the instrument is 115 months. It is beneficial for those who are looking for schemes that have no market risk associated with them and provide a good return.

Do you own Kisan Vikas Patra and don’t know how to report it in your ITR or how to avail tax benefits on it? Don’t worry! Consult a tax expert now!

---