Kisan Vikas Patra (KVP)

The Kisan Vikas Patra (KVP) scheme was introduced by the Government of India Postal Department in 1988. Though initially targeted at farmers to promote saving habits, over time it has become popular with non-farmer investors too. KVP certificates can be purchased from designated post office branches and banks with a minimum investment of Rs 1000.

KVP certificate has a tenure of 115 months and offers guaranteed returns to depositors. On maturity, the invested amount doubles. KVP thus provides citizens, especially in rural areas, a safe long-term investment option and assured returns after the fixed term.

Interest Rate of KVP

The interest rate offered on Kisan Vikas Patra is revised quarterly by the Finance Ministry. As announced recently, KVP certificates will earn 7.5% annual interest from October 1, 2022, onwards, applicable for the third quarter of the financial year 2023-24. This rate ensures the money invested doubles in 115 months or 9 years, 7 months. Here are the highlights of Kisan Vikas Patra:

Kisan Vikas Patra Eligibility

Here are the eligibility criteria for investing in the Kisan Vikas Patra scheme in point form:

• Applicants must be over the age of 18 and a resident of India.
• Parents or legal guardians can invest on behalf of a minor or person with an unsound mind,
• NRIs (Non-Residents of India) and Hindu Undivided Families (HUFs) cannot invest in the scheme.

Documents For Kisan Vikas Patra

To purchase a Kisan Vikas Patra certificate, an applicant needs to submit copies of these documents for the KYC process:

• Valid identity proof (Aadhaar/PAN/Voter ID/Driving License/Passport)
• Duly filled KVP application form
• Address proof
• Date of birth certificate

KVP Tax Benefit

Investments made in Kisan Vikas Patra certificates do not qualify for tax benefits under Section 80C. While KVP investments themselves are not eligible for income tax deductions, the assured returns offered are exempt from any tax. After the 115-month maturity period, investors can withdraw the full proceeds without deduction of any TDS.

Types of Kisan Vikas Patra Scheme

Kisan Vikas Patra certificates are issued in three types catering to different investor needs:

1. Single holder certificate: Allotted by one person who invests for self or on behalf of the minor. The certificate is in the name of a single individual.
2. Joint A type certificate: Issued jointly in the names of two adults who are both account holders. Benefits and payouts are given to both holders and the survivor.
3. Joint B type certificate: Also issued to two joint holders but payout can be received by either holder individually or nominee in case of the death of holders. Provides flexibility in receiving maturity and other benefits.

Who Should Invest in the KVP Scheme?

• KVP can be purchased by any Indian citizen above 18 years from designated post offices.
• It is a good option for rural citizens with no existing bank accounts.
• One can invest for himself, a minor, or jointly with another adult.
• Trusts are eligible to purchase KVP but NRIs and Hindu Undivided Families don't qualify.
• Safe investment for conservative investors with excess funds held for longer tenure.
• Not the best option for tax savings - Other schemes like PPF, and NSC are better for claiming tax deductions under Section 80C.
• Those open to some risk can consider ELSS funds - Equity Linked Savings Schemes ideal for investors willing to undertake some risks.

Features & Benefits in Kisan Vikas Patra

• Assured Returns: Provides fixed returns regardless of market volatility, intended to encourage savings among farmers.
• Capital Protection: Being a government-backed scheme, the invested capital remains fully safe and secured.
• Interest Rate: Variable interest rates declared quarterly by gov. Currently at 7.5% p.a. (for Q2 FY 2023-24) compounded annually to give a higher maturity value.
• Maturity: Term of 115 months (9 years 7 months) after which maturity amount can be withdrawn. Interest accrues beyond maturity until withdrawal.
• Premature Withdrawal: Allowed only after 2 years 6 months. Permitted in case of death of an investor or by court order.
• Affordability: The minimum investment is Rs.1,000 and there is no maximum investment limit.

How To Transfer Kisan Vikas Patra Account

To transfer a Kisan Vikas Patra certificate from one person to another, the account holder needs to submit a written request at the post office where it was purchased.
The transfer is permitted only in these scenarios:

• From a deceased certificate holder to his/her legal heir
• From a single account holder to joint account holders
• From joint account holders to a single account holder
• From the existing account holder to another person as per court order
• The transfer application has to be submitted at the post office where the certificate was purchased
• Applicable transfer rules should be checked before initiating ownership change

Premature Withdrawal

Kisan Vikas Patra certificates have a lock-in period of 30 months. However, investors can only withdraw maturity proceeds after the completion of the full tenure of 115 months. Premature withdrawals are not allowed, except in certain cases. On premature closure, because of the demise of the account holder or a court order, withdrawal is permitted before maturity. Barring these exceptional situations, investors have to hold the KVP certificate until the end of the 115-month term to receive their returns.

Kisan Vikas Patra Encashment

Here are the steps to encash Kisan Vikas Patra certificates:

• Encash at the same post office that issued the certificate or complete formalities for different post offices.
• Submit the identity slip provided at the time of purchasing the KVP certificate.
• Provide a written application/letter for encashment along with the identity slip.
• On maturity, visit the designated post office with the letter and submit identity proof.

Loan Against KVP Certificate

Here are the key points about availing a loan against Kisan Vikas Patra certificates:

• Loans can be availed in the name of the KVP account holder.
• Funds can be used for personal necessities or business expenses.
• The loan amount cannot be utilised for speculative purposes.
• The interest rate and charges differ across banks and post offices.
• Applicable fees and margins get revised periodically.
• The loan must be repaid within the tenure of the KVP certificate.
• The sanctioned loan amount depends on investment and time to maturity.

Steps to Invest in KVP Online

Investing in Kisan Vikas Patra through the online mode involves these steps:

Step 1: Download the KVP application form (Form A) online from India Post's website or portal.

Step 2: Fill in all required personal and investment details in the form accurately.

Step 3: If investing through an agent, also complete and attach the agent details form (Form A1).

Step 4: Submit a copy of identity proof (Aadhaar, PAN, etc) for KYC verification.

Step 5: Pay the deposit amount online via net banking or other payment modes.

Step 6: Once documentation is verified and funds are credited, the KVP certificate will be dispatched through email or post to the registered address.

Kisan Vikas Patra Nomination

The nomination facility in Kisan Vikas Patra is straightforward. Investors have to get the nomination form from the post office branch and submit it duly filled along with the investment application. If the nominee is a minor, their date of birth and copy of their birth certificate are required to be attached with the nomination form. This allows smooth transfer of the KVP proceeds to the nominee on the death of the account holder.