Kisan Vikas Patra (KVP) is a certificate scheme launched by the Indian post office. The Kisan Vikas Patra (KVP) has the ability to double a one time investment within a period of 124 months (10 Years and four months). This will happen if you purchased the Kisan Vikas Patra after April 1st, 2020. For instance, a Kisan Vikas Patra for Rs. 10,000 will get you a corpus of Rs. 20,000 after maturity. If you have been wondering about the Kisan Vikas Patra, its interest rates and should you buy it, this post will help you make that decision. Let’s get started.
KVP Interest Rates: All You Need to Know
What is Kisan Vikas Patra (KVP)?
India Post introduced the Kisan Vikas Patra as a small scale saving certificate scheme in 1988. The Kisan Vikas Patra’s main objective is the encouragement of long-term financial discipline among people (especially farmers). As per the newest update, the tenure for the scheme is now 124 months (10 years & 4 months) if you buy 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 lumpsum today, you can get double the amount at the end of the 124th month. Initially, it was exclusively designed for farmers to enable them to save lots of money in the long-term, hence the name. However, it is available for all people now. 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 will be required to submit income proof (salary slips, bank account statement, ITR document etc.). It is a low-risk savings platform, where you’ll safely park your money for a particular period. Further, it is also mandatory to submit AADHAAR number as proof of identity of the account holder.
What are the types of certificates available for purchase?
These are the types of Kisan Vikas Patra certificates:
Single Holder Type Certificate: This certificate is issued to an adult for self or on behalf of a minor or to a minor.
Joint ‘A’ Type Certificate: This certificate is issued jointly to 2 adults, payable to both the holders jointly or to the survivor.
Joint ‘B’ Type Certificate: This certificate is issued jointly to 2 adults, payable to either of the holders or to the survivor.
Who should invest in the KVP scheme?
Any Indian citizen above the age of 18 years can purchase a Kisan Vikas Patra from the closest post office. This is highly appealing for people residing in rural India, especially the ones without a bank account. You can also buy one 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 also can buy one, but not a HUF (Hindu Undivided Family) or an NRI.
KVP can also serve as a good selection for risk averse individuals who have surplus money. It all depends on your risk profile and goals. For example, people who are seeking tax saving tools can choose to invest in Public Provident Fund, National Saving Certificates and tax saving bank FD Schemes. If you are open towards having some level of risk exposure, you have the Equity Linked Savings Scheme (ELSS). Hence, play to your financial strengths.
What are the features & benefits of Kisan Vikas Patra (KVP)?
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 lots of money for hard days.
Capital protection
It is a secure mode of investment and not subject to plug risks. You will receive the investment and gains when the tenure ends.
Interest
The effective interest rate for Kisan Vikas Patra depends on the actual number of years invested in the KVP. The current interest rate is 7.7% for the quarter between October 1st, 2018 to December 31st, 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’ll be able to avail the corpus then. The maturity proceeds of KVP will still accrue interest till you withdraw the quantity.
Taxation
It doesn’t come under the 80C deductions, and the returns are completely taxable. Withdrawals after the maturity period are exempt from Tax Deducted at Source (TDS).
Rules to premature withdrawal
You can withdraw the amount after 124 months. But the lock-in period is 30 months. Encashing the scheme early isn’t allowed, unless caused by the account holder’s demise or a court ruling.
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 (GPO).
Loan against KVP certificate
Your KVP certificate can also be utilized 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 refill the specified information of the nominee. If you’re nominating a minor, mention the date of birth.
KVP certificate issuance
If payment is completed 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 consists of the following:
- Kisan Vikas Patra Certificate
- KVP serial number
- The amount
- The maturity date and the amount to be received on the date of maturity.
KVP Interest Rates: History
| Quarter/Financial Year | 2016-2017 | 2017-2018 | 2018-2019 | 2019-2020 | 2020-2021 |
| 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) |
| 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) | Yet to announce |
| 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) | 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) | Yet to announce |
How to invest in Kisan Vikas Patra (KVP) and what are the documents required?
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: Go to your nearest post office/bank and submit the form.
Step 3: If the investment in KVP is through an agent, then the agent should fill Form A1. You can 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 or a demand draft drawn in the favour of the postmaster.
Step 6: You will get a KVP certificate immediately unless you make the 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.
How to nominate people for the Kisan Vikas Patra (KVP)?
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 it should be done prior to maturity by submitting the duly filled Form C). Head over to your nearest post office/bank and submit it to the postmaster/bank officer.
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.
