Kisan Vikas Patra: Benefits, Limit, Tax, Interest Rate

Kisan Vikas Patra Features

Kisan Vikas Patra (KVP) is one of the most safest investment product offering high returns and is much better than other small savings instruments.

Benefits of KVP

Money invested in KVP will get doubled (8.7% interest) in 100 months i.e. 8 years and 4 months. For e.g. if you invest Rs. 1 Lac then on maturity you’ll get Rs. 2 Lac.

Investment Limit

  • Minimum limit: Rs. 1000
  • Maximum limit: There is no cap on investment.

For investing in this scheme following denominations are available:

  1. Rs. 1,000
  2. Rs. 5,000
  3. Rs. 10,000
  4. Rs. 50,000

I want to invest Rs.70,000, how can I do it? Since the above mentioned denominations are fixed, you have to use combination i.e. buy certificates worth 50,000, 10,000 and 10,000 or other denominations.

Documents Required: Investors need to submit know your customer (KYC) i.e. ID proof and address proof. And permanent account number when Rs. 50,000 or more is invested.

Why KVP was relaunched: Main objective of the government was to increase savings and protect people especially from rural areas from fraudulent money making schemes. After Jan Dhan Yojana, this is yet another scheme to protect money of people from rural area.

What is the lock-in period: Lock-in period is 2 years and 6 months i.e. 30 months.

How to invest in KVP: You need to visit nearest post office, ask for the form, fill it along with recent photographs. Once all the details are provided; post office will issue you a printed KVP certificate. Payment is required to be done either by cheque or demand draft. Government is also planning to issue KVP certificates through nationalized banks.

Can we open account jointly and transfer account: Yes. The account can be opened jointly. And most importantly the account can be transferred from one post office to the other and can also be transferred from one person to another as many times required. But for transfer, you need to complete formalities and requires approval of the post-master.

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Who can invest and who cannot: Anyone can invest in KVP – single or joint (adult). You can also invest on behalf of a minor. However NRI’s are not eligible.

What is the interest rate offered: Annual rate of return offered in Kisan Vikas Patra is 8.7%.

Does KVP offer any tax benefit: There is no tax benefit on the interest earned.

Where would the money get invested: Money gets invested in government schemes such as financing the development projects within the country, bonds etc. offering security.

Can money be withdrawn prematurely: Yes. In KVP, premature withdrawal is possible but only after the lock-in period. Post that full money can be encashed along with the interest which is less than the normal rate.

Loan on KVP: KVP will act as a surety which banks and other financial institutions will accept while offering you a loan.

What happens if KVP is lost or damaged:  Duplicate KVP will be issued to you.

Also see KVP and NSC difference

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