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All You Need To Know About Kisan Vikas Patra (KVP)

Kisan Vikas Patra

Introduced in 1988, Kisan Vikas Patra (KVP) is a small saving certificate scheme that encourages people to save for the long term. Individuals can save a minimum of Rs.1,000, while the denominations available under this plan are Rs.100, Rs.500, Rs.1,000, Rs.5,000, Rs.10,000, and Rs.50,000. Customers can purchase any number of certificates by submitting their proof of identity and proof of residence. Hence, there is no upper limit in this scheme. The tenure for this scheme is 112 months or 9 years and 4 months. Kisan Vikas Patra is one of the 9 small savings schemes that is offered by the India Post that currently has more than 1.5 lakh post offices across the length and breadth of the country.

Features and Benefits of Kisan Vikas Patra

See the list mentioned below to learn about the key features of the Kisan Vikas Patra:

  1. Safe mode for investment

When you choose to invest in this scheme, you can remain assured that your capital will be protected from any market risks. Hence, you will receive guaranteed returns at the end of the investment period no matter what the market condition is.

  1. Guaranteed returns

Since investments in Kisan Vikas Patra are not subject to any market risks, it ensures that the investor receives guaranteed returns irrespective of the market fluctuations.

  1. Minimum and maximum balance required

Individuals can open a Kisan Vikas Patra account at any post office with a minimum amount of Rs.1,000. While the denominations available under this scheme include Rs.100, Rs.500, Rs.1,000, Rs.5,000, Rs.10,000, and Rs.50,000, there is no upper limit for investment. It should be kept in mind that the Rs.50,000 denominations can be purchased only from the head post office of a city.

  1. Eligibility

Any resident of India who is above 18 years of age can apply for this certificate singly or jointly. This certificate can also be obtained by a minor or an adult on behalf of a minor. However, the KVP certificates are not available to members of a Hindu Undivided Family (HUF), Non-Resident Indians (NRIs), and corporates.

  1. Tenure

Currently, the maturity period of Kisan Vikas Patra is 112 months – which is 9 years and 4 months – making it one of the best saving options in the long run. However, if the investor doesn’t withdraw the amount even after maturity, the KVP will continue to accrue interest until withdrawn.

  1. Interest

Since the interest for this certificate is compounded annually, it ensures that the investors gain more returns as interest at the end of the investment tenure. The interest rate for this saving scheme depends on the number of years of investment starting from the date of purchase. The government revises the applicable rate of interest for this scheme on a quarterly basis.

  1. Nomination and encashment

KVP certificates can be encashed after the completion of two and half years starting from the date of purchase. Investors can also choose to avail the nomination facility available under this saving scheme to transfer this account to another person or post office by filling out and submitting a nomination form, mentioning the full name and address of the nominee, along with the application. Please note that you will also be required to mention the date of birth of the nominee if he/she is a minor.

  1. Tax Benefit

Even though the interest gained from this scheme is completely taxable, the Tax Deducted at Source (TDS) is exempted from any withdrawals once the KVP account reaches maturity.

  1. Lock-in Period

The Kisan Vikas Patra carries a lock-in period of 30 months before which the investor is not allowed to make any withdrawals without a court order or the demise of the account holder.

  1. Loans against KVP certificate

When applying for a loan, KVP account holders can use their certificates as collateral or security in order to receive a lower interest rate on their loan application.

  1. Multiple channels for payment

If you want to purchase a Kisan Vikas Patra certificate, you will have the flexibility to make the payment through cash, demand draft, cheque, or money order as per your convenience.

  1. Issue of KVP certificate

KVP certificates are issued on the spot if the investor makes a cash payment. However, in case the payment for this scheme is done through any other mode, the certificate is issued only after the amount is cleared to the post office.

  1. KVP Identity Slip

The identity slip of a Kisan Vikas Patra includes a KVP certificate, the amount, the KVP serial number, the date of maturity, and the final amount that the investor will receive after the maturity date.

Types of Kisan Vikas Patra Certificates

Before you decide to invest in this scheme, you should become aware of the type of Kisan Vikas Patra certificates that are available. There are 3 types of KVP certificates:

  • Single Holder Type Certificates – These certificates can be issued to adult or minor individuals. An adult can also apply for this kind of KVP certificate on behalf of a minor.
  • Joint ‘A’ Type Certificates – This type of certificate is generally issued to two applicants who have applied for a Kisan Vikas Patra jointly. Under this certificate, the proceeds will be payable to both the holders upon maturity or to the survivor.
  • Joint ‘B’ Type Certificates – These types of KVP certificates are also issued to two individuals who have applied for a Kisan Vikas Patra jointly. However, the proceeds under this certificate are payable to either of the holders once the account reaches maturity or to the survivor.

Documents Required to Purchase Kisan Vikas Patra

Check out the list of documents that you will be required to submit in case you are planning to purchase a Kisan Vikas Patra certificate:

  • Duly filled application form or Form A
  • Proof of identity such as Aadhaar card, PAN card, Voters ID, Passport, Driving License, etc.
  • Proof of address such as Passport, Voters ID, Driving License, Aadhaar card, Ration card, utility bills, etc.
  • PAN card (if the investment made is above Rs.50,000)

Please note that you will also have to submit the Form A1 if the investment is made through a broker or an agent.

Conclusion

Kisan Vikas Patra (KVP) certificates are one of the best saving schemes that are available in India since they offer high guaranteed returns over a long tenure without being subject to the market risks. These certificates can be issued to both adults and minors, and the minimum investment amount required is Rs.1,000 with no upper limit. While KVP certificates carry a lock-in period of two and half years, the maturity period for these accounts are 112 months or 9 years and 4 months. If the investor doesn’t withdraw the proceeds even after the maturity of this account, KVP certificates continue to accrue interest which is compounded annually. These certificates can also be used as collateral or security while applying for a loan to get a lower interest rate. Hence, investing in these certificates are a great option to save money over a long term if your investment goals are in line with this scheme.

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