Kisan Vikas Patra

Kisan Vikas Patra saving certificate scheme is among the most sought-after schemes offered by the Indian post office. The certificate scheme draws the attention of investors by offering to double one-time investment within a tenure of 124 months. The key reasons behind the popularity are the sovereign guarantee. As the name suggests, the Kisan Vikas Patra was initially designed for the farmers. However, the scheme is now available for all who pass the eligibility criteria.

Indian post office launched the certification scheme in 1988 for building a habit of long term investment in farmers. The KVP post office scheme was successful in reaching its objective, as a result it was later opened for everyone. There is no maximum limit for investment under this scheme; however, the investment has to be a minimum of ₹ 1,000. To avoid misuse of the scheme like money laundering, the Government made a few changes in the guidelines in 2014. If you want to invest more than ₹ 50,000 the furnishing PAN Card is compulsory. In addition, if you want to invest ₹ 10 Lakh or more then submission of income proofs like salary slip, ITR, bank statements, etc. is mandatory.

Before opting to invest in the scheme named Kisan Vikas Patra post office offers, let’s have a detailed discussion on the scheme.

The KVP post office scheme offers three types of accounts for the investors to choose from.

Single Holder certificate: The single holder certificates work like the regular single savings accounts. The single holder certificate is furnished to an adult. Furthermore, a minor can avail the benefits of the scheme; however, a minor account has to be operated by an adult.

Joint A certificate: Joint A certificates function in the same way as the regular joint accounts. The certificate is issued on the name of both adults holding the account under the Kisan Vikas Patra. At maturity, the corpus is generated to both adults. At the demise of any account holder, the later receives the corpus.

Joint B certificate: Just like the Joint A certificate, a joint B certificate is furnished to two adults holding the account. However, the payout is not similar. Under the joint B certificates, one of the account holders receives the corpus.

The Kisan Vikas Patra offers several benefits that have been explained below.

Compounding interest

The Kisan Vikas Patra uses the compounding method that generates higher returns. The interest accumulated on the principal amount under the scheme is compounded yearly, fetching higher returns. However, the returns depend on the Kisan Vikas Patra interest rate in the year the money was invested.

Guaranteed returns

The KVP scheme does not get influenced by any market turbulence and is backed by the Indian Government. Hence, it generates guaranteed returns.

Amiable investment limit

You can invest as lowest as ₹ 1,000 under the scheme. The scheme has not set any maximum limit. However, you will be required to furnish PAN details if the investment amount crosses ₹ 50,000.

Interest rate

The KVP interest rate changes periodically as announced by the Indian Finance Minister. The interest rates applied to an investment made under the scheme will be determined based on the year of investment. For the 2020-2021 financial year, the Kisan Vikas Patra interest rate is 6.9%.

Transferable

Accounts under the Kisan Vikas Patra can easily be shifted from one account holder to another. However, a few formalities and approval from the respective post office will be required.

Nomination facility

The KVP scheme offers nomination facilities. You can submit the nomination form at the post office. A minor can also be the nominee for the deposit made. Remember to mention the date of birth in case you are nominating a minor.

Loan against KVP

You can avail loans against the certificate of KVP. Interest rates on loans taken against KVP are lower than regular loans.

Tax benefits

The corpus received at maturity is exempt from TDS. However, the scheme is not eligible for any tax benefits under 80C section of the Indian Income Tax Act, 1961.

The KVP Interest rates change periodically as per the announcements made by the finance ministry and remain fixed for the specified quarter. Also, the applicable rate of interest determines the maturity tenure of investment. For the financial year 2020-2021, the rate of interest for KVP schemes stands at 6.9% p.a for an investment tenure of 114 months.

The KVP interest rate for the last few quarters is mentioned below:

Quarter/Financial Year	KVP Interest Rates
Q1 FY 2020-21	6.9% p.a
Q4 FY 2019-2020	7.6% p.a
Q2 FY 2019-2020	7.6%p.a
Q1 FY 2019-2020	7.7% p.a
Q4 FY 2018-2019	7.7% p.a

Below is the list of individuals who are eligible for Kisan Vikas Patra.

• Indian residents
• A minimum of 18 years old
• Minors (through an adult).
• A Trust can also invest in KVP post office scheme.

Withdrawal Procedure of KVP

You can withdraw money from Kisan Vikas Patra in the below-mentioned ways.

On maturity

On maturity, you receive the total corpus including principal amount and the interest.

Before maturity

The scheme allows premature withdrawal. However, premature withdrawals will lead to a lower KVP interest rate and penalty. Here is the list of penalties and charges applied for premature withdrawals.

Withdrawal	Interest	Penalty
Before completing 1 year	Interest is not accumulated	Yes
From 1 year up to 2.5 years	Low-interest rate	No
From 2.5 years and before maturity	The pre-decided interest rate	No

Remember, to encash the Kisan Vikas Patra certificate, you will have to visit the post office or the branch of the bank where you made the investment and obtain a permit from the respective post office or branch manager.

✅What is the maturity period of KVP?

The maturity period of KVP is 124 months.

✅Can I purchase Kisan Vikas Patra online?

No, you cannot avail the Kisan Vikas Patra online. The Kisan Vikas Patra form can be downloaded online; however, you have to submit the form at the post office.

✅Is Kisan Vikas Patra tax free?

Post maturity, the Kisan Vikas Patra is tax-free. Premature withdrawal is taxable in the hands of the depositor.

✅Which is better KVP vs FD?

In terms of risk factors and interest rates, KVP and FD provide the same facilities. You can opt for either in accordance with your financial needs. If you want to receive the corpus at maturity, you should opt for the KVP and if you require periodic payouts, go for the FD.