Kisan Vikas Patra

Kisan Vikas Patra is a certification scheme that was introduced by the Indian post office. The scheme was basically introduced as a small saving certificate scheme in the year 1988. The Kisan Vikas Patra scheme was formulated with the aim to promote long-term financial savings discipline in people. The scheme is very effective, and it doubles an individual’s one-time investment in a period of approximately 10 years & 4 months. Apart from this, the KVP scheme requires a minimum investment of Rs. 1000 and there is no restriction over the maximum amount of investment.

As of now, the Kisan Vikas Patra scheme is offering a rate of interest at 7.7% which is also compounded on an annual basis. The scheme also enables individuals to add nominees to the scheme. Furthermore, the certificate is easily transferable from one individual to another and from one post office to other. Notably, this scheme allows an investor to encash the certificate 30 months from when it was originally issued.

Types of Certificates that are available in the Kisan Vikas Patra scheme:

Several types of Kisan Vikas Patra are available. Some of them are Single Holder Type Certificates, Joint ‘A’ Type Certificates, and Joint B’ Type Certificates. The Single Holder Type Certificate is issued to an adult individual for themself or on behalf of a minor or to a minor. A joint ‘A’ Type Certificate is issued to 2 adults jointly and the certificate is payable to both or the survivor. The last one is the Joint ‘B’ Type Certificate, this kind of certificate is issued jointly to 2 adults and is payable to either the holder or to the survivor.

Eligibility for Kisan Vikas Patra:

The eligibility criteria for the Kisan Vikas Patra are very simple to understand. Any individual who is applying for the KVP must be above the age of 18 years and should be an Indian citizen. Also, an adult can apply on behalf of a minor. Moreover, HUFs and NRIs are not eligible to invest in this scheme.

Features and Benefits of Kisan Vikas Patra:

  • Guaranteed returns : This scheme is not affected by fluctuations in the market and the individual will receive a guaranteed return. This scheme was originally formulated for the farmers to encourage savings among them so that they can also save for the rainy season when there is no or very less produce to sell.

  • Protection of Capital : Under this scheme, the capital amount is completely protected and is not subjected to risks associated with the market. KVP is a very safe option to invest in where the investor gets the investment and gains as and when the tenure of the scheme ends.

  • Rate of Interest : The rate of interest that an individual receives in this scheme depends on the number of years for which the investment has been made at the time of signing up for the scheme. Presently, the interest rate is 6.9% p.a. for the Q2 FY 2022-23.

  • Maturity Period of KVP : The Kisan Vikas Patra scheme has a maturity period of 124 months after which the individual can avail of the corpus.

  • Tax benefits : It is important to note that the returns that one receives under this scheme are completely taxable as the scheme does not come under the 80C deductions. Though the TDS is exempted from withdrawals after the maturity of the scheme.

  • Premature withdrawals : Premature withdrawals or encashing the scheme early are not allowed under Kisan Vikas Patra, except in case of the account holder’s demise or court order. This account matures after 124 months, and it has a lock-in period which is 30 months.

  • Ease and Affordability : This scheme is easy to apply for, quite affordable, and available in varied denominations of Rs. 1000, Rs. 5000, Rs. 10,000, and Rs. 50,000 for investment purposes. On the other hand, there is no maximum limit to investment in this scheme.

  • Loans against KVP certificate : The Kisan Vikas Patra certificate can be used as collateral or security too at the time of availing secured loans. On such kinds of loans, the interest rate is comparatively less.

  • Nomination facility : The KVP allows the investor with the nomination facility, in this the investor must collect the nomination form from the post office and fill in all the required details about the nominee. If the investor is nominating a minor, then he/she must give information regarding the date of birth of the nominee.

  • KVP certificate issuance : If cash payment is made for the KVP scheme, then they issue the certificate on the spot but in case of a cheque, demand draft, or money order one must wait till the amount is cleared to the post office.

Thus, the Kisan Vikas Patra Scheme is a low-risk investment option, where the money invested is safe for a certain period. When the KVP scheme was formulated, it was meant for farmers to encourage them for long-term investments but now it is available for all. Invest your money in this scheme and get good returns with the total security of your capital.