What is Kisan Vikas Patra (KVP)?
Kisan Vikas Patra (KVP) is a savings scheme offered by the Government of India to promote long-term savings among individuals, particularly in rural areas. It is a fixed income investment instrument that allows individuals to invest a certain amount of money for a specified period and earn guaranteed returns.
Benefits of Kisan Vikas Patra (KVP)
- Safe and Secure Investment: KVP is a government-backed savings scheme, providing a high level of safety and security for investors. The investment is protected against loss, theft, or damage.
- Fixed Returns: KVP offers fixed returns on the investment, which are compounded annually. The interest rates are determined by the government and remain fixed for the duration of the investment.
- Guaranteed Returns: The returns on KVP are guaranteed by the government, providing investors with assurance and predictability regarding the growth of their investment.
- No Maximum Limit: KVP does not impose any maximum limit on the investment amount. This allows individuals to invest a substantial sum of money without any upper cap.
- Tax Efficiency: The interest earned on KVP is taxable as per the individual’s income tax slab. However, there is no tax deduction at source (TDS) on the interest, which means investors can receive the full interest amount and pay taxes on it separately.
- Loan Collateral: KVP certificates can be used as collateral for obtaining loans from banks and other financial institutions. This provides an additional avenue for investors to leverage their investment for financing purposes.
- Flexibility in Transfer: KVP certificates can be transferred from one person to another under specific conditions, such as in the event of the account holder’s death or by court order. This transferability feature allows for ease of ownership succession.
- Easy Accessibility: KVP can be conveniently availed at designated post offices across India. The accessibility of the scheme makes it accessible to a wide range of individuals, including those residing in rural areas.
Who Can Open an Account?
(i) A single adult who is an Indian citizen and above 18 years of age can open a Kisan Vikas Patra account in their own name.
(ii) A joint account for Kisan Vikas Patra can be opened by a maximum of three adults, who are Indian citizens and meet the eligibility criteria, as account holders.
(iii) A guardian, such as a parent, legal guardian, or authorized caregiver, can open a Kisan Vikas Patra account on behalf of a minor or a person of unsound mind, ensuring their best interests are protected.
(iv) A minor above 10 years of age, who is an Indian citizen, is eligible to open a Kisan Vikas Patra account in their own name, subject to applicable rules and regulations.
- KVP Account Opening form.
- Two Photographs.
- KYC Documents with Identity & Address Proof.
(i) Under the Kisan Vikas Patra scheme, a minimum deposit of Rs. 1000 is required to open an account, and subsequent deposits must be made in multiples of Rs. 100. There is no maximum limit for deposits.
(ii) Individuals are allowed to open any number of accounts under the Kisan Vikas Patra scheme. There is no restriction on the maximum number of accounts that can be opened by an individual.
The current interest rate for the Q1 FY 2023-24 is 7.5% per annum, compounded yearly. Compounding the interest means that the interest earned in each year is added to the principal amount, and subsequent interest is calculated based on the increased principal.
Maturity and Tenure
The maturity period for Kisan Vikas Patra (KVP) is 120 months, which is equivalent to 10 years. After the completion of this period, you can avail the corpus or the maturity proceeds.
The maturity period for the deposit in Kisan Vikas Patra is determined by the Ministry of Finance and may vary over time. The applicable maturity period for a particular deposit is based on the rules and regulations in effect on the date of the deposit. It is important to check with the relevant authorities or financial institutions to determine the specific maturity period applicable to your deposit at the time of making the investment.
Pledging of Kisan vikas Patra (KVP)
(i) Kisan Vikas Patra (KVP) can be pledged or transferred as security by submitting a prescribed application form at the respective Post Office. Along with the application form, an acceptance letter from the pledgee is required.
(ii) The transfer or pledging of KVP can be made to the following authorities:
- The President of India/Governor of the State.
- Reserve Bank of India (RBI)/Scheduled Bank/Co-operative Society/Co-operative Bank.
- Corporation (public/private)/Government Company/Local Authority.
- Housing finance company.
Premature closure of Account
Kisan Vikas Patra (KVP) can be prematurely closed before the maturity period, subject to certain conditions. These conditions are as follows:
(i) In the event of the death of the single account holder or any or all of the account holders in a joint account, the KVP can be prematurely closed.
(ii) If the KVP has been pledged and a Gazette officer declares a forfeiture, the premature closure of the KVP can take place.
(iii) The premature closure of the KVP can be initiated when there is a court order mandating the closure.
(iv) Additionally, KVP can be prematurely closed after 2 years and 6 months from the date of deposit.
Transfer of Account ownership
Kisan Vikas Patra (KVP) can be transferred from one person to another under specific conditions. These conditions are as follows:
(i) In the event of the death of the account holder, the transfer of KVP can be made to the nominee or legal heirs as designated by the account holder.
(ii) If the KVP is held jointly, and one of the joint account holders passes away, the transfer of KVP can be made to the surviving joint holder(s).
(iii) The transfer of KVP can be ordered by the court in certain circumstances as determined by the legal proceedings.
(iv) KVP can be transferred when it has been pledged to a specified authority or entity as per the applicable rules and regulations.
Q. What is the Maturity Period for Kisan Vikas Patra (KVP)?
A. The maturity period for KVP is typically 10 years (120 months). However, it’s important to check the current rules and regulations as the maturity period can be subject to change.
Q. Is the Interest Earned on Kisan Vikas Patra (Kvp) Taxable?
A. Yes, the interest earned on KVP is taxable as per the individual’s income tax slab. However, there is no tax deduction at source (TDS) on the interest.
Q. Can I withdraw my investment before the maturity period?
A. Yes, premature withdrawal is allowed under specific conditions, such as the death of the account holder, court orders, or pledging of the account. However, premature withdrawal may be subject to certain penalties or deductions.
Q. Can I Transfer My Kisan Vikas Patra (KVP) to Another Person?
A. Yes, KVP can be transferred from one person to another under specific conditions, such as in the event of the account holder’s death or by court order.
Q. Can Kisan Vikas Patra (KVP) Be Used as Collateral for Obtaining Loans?
A. Yes, KVP certificates can be used as collateral for obtaining loans from banks and other financial institutions.
Q. Where Can I Purchase Kiasan Vikas Patra (KVP)?
A. KVP can be purchased at designated post offices across India. It is advisable to visit the nearest post office or check with the relevant authorities for the availability and procedure of purchasing KVP.
Q. Is There Any Lock-in Period for Kisan Vikas Patra (KVP)?
A. Yes, KVP has a lock-in period of 30 months (2 years and 6 months) from the date of deposit. Premature withdrawal is not allowed before the completion of the lock-in period.