Kisan Vikas Patra

Kisan Vikas Patra

Kisan Vikas Patra is a savings certificate scheme which was first launched in 1988 by India Post. It was successful in the initial months but later the Government of India formed a committee under the supervision of Shyamala Gopinath which gave its recommendation to the government that the KVP could be misused. Hence the Government of India decided to discontinue the scheme and in 2011 the KVP was discontinued and the new government relaunched it in 2014. As per the latest update, the tenure of the scheme is now 124 months (10 years and 4 months). You purchase the certificate between 1 April 2020 and 30 June 2020. The minimum investment is Rs. 1000 and there is no upper limit. And if you invest right today, you can get double the amount at the end of the 124th month. Initially, it was meant to enable farmers to save for a longer period, and hence the name. It is now available to all. To curb the possibility of money laundering, the 2014 government made PAN card proof mandatory for investments above Rs. 50,000. To deposit Rs. 10 lakh and above, you will have to submit income proof (salary slip, bank details, ITR documents etc.). It is a low-risk savings platform, where you can safely park your money for a fixed period. In addition, submission of Aadhaar number as proof of identity of the account holder is also mandatory.

Any Indian citizen above the age of 18 years can purchase Kisan Vikas Patra from the nearest post office. People in rural India (those without bank accounts) find it particularly attractive. You can also buy for a minor or jointly with another adult. Be sure to mention the date of birth of the minor and the name of the parent / guardian. A trust can also purchase, but not HUF or NRI.

KVP is a good option for at-risk individuals who have surplus funds they may not need in the near future. It all depends on your risk profile and goals. For instance, people who get tax saving schemes have better options like Public Provident Fund, National Savings Certificate and Tax Saving Bank FD schemes. If you are open to some level of risk exposure, you have an equity linked savings plan (ELSS). Therefore, play to your financial strength.

Features and benefits of Kisan Vikas Patra

Guaranteed return

Despite the fluctuations in the market, you are guaranteed a guarantee. Since the scheme was originally meant for the farming community, the priority was to encourage them to save for the rainy days.

Capital Preservation

It is a safe method of investment and is not subject to market risks. At the end of the tenure you will get investment and benefits.

Interest

The effective interest rate for Kisan Vikas Patra varies depending on the number of years invested in the KVP at the time of purchase. The current interest rate is 7.7% for the quarterly 1 October 2018 to 31 December 2018, before which the rate was 7.3%, compounded annually. By reducing the interest, you will get more return on your deposit. From 1 April 2020 the interest will be 7.6%.

Tenure

The maturity period of Kisan Vikas Patra is 124 months and you can avail funds after that. KVP's maturity interest will continue to increase until you withdraw the amount.

Tax Benefits

It does not fall under the 80C deduction, and the returns are fully taxable. However, tax deducted at source (TDS) is exempt from withdrawal after maturity.

Rules for premature withdrawal

You can withdraw the amount after 124 months. But the lock-in period is 30 months. Till the demise of the account holder or the order of the court is not allowed to start the scheme.

Ease and affordability

KVP is available in denominations of Rs. 1000, Rs. 5000, Rs. 10,000 and Rs. 50,000 for investment. There is no maximum limit. Please note that Rs. Denominations of. 50,000 are available only at the head post office of a city.

 

Loan against KVP certificate

You can use your KVP certificate as collateral or security to avail secured loans. The interest rate for such loans is comparatively low.

Nomination facility

Collect a nomination form from the post office, and fill in the required information of the candidate. If you are enrolling a minor, please mention the date of birth.

KVP Certificate Issuance

If the payment is made through cash, they issue the KVP certificate on the spot. And for check, demand draft or money order, you have to wait till the amount is deposited in the post office.

KVP Identity Slip

This includes Kisan Vikas Patra Certificate, KVP serial number, amount received on maturity date and maturity date

Nomination

Single holders or joint holders of a certificate can make a nomination by filling up the details in Form C at the time of purchase. You can nominate any person so that the nominee will be entitled to the benefits of the certificate in the event of the death of the single holder or both the joint holders.

If a nomination is not made at the time of purchase, the sole holder, joint holder or surviving joint holder can enroll at any time after the purchase of the certificate, but by submitting a duly filled Form C before maturity. It goes to the postmaster or bank officer where the certificate is registered.

However, no nomination can be made if a certificate is attached on behalf of or for a minor. If a nomination is made in this case by the certificate holder or by the holder, the form will be canceled or changed using D.

When you have more than one certificate registered on different dates, you will have to apply separately for nomination, cancel the nomination or vary the nomination. One such application will be effective from the date of its registration and will be noted on the certificate. Nominations made for the first time are free of cost. After this, a fee of Rs 20 per application will be charged for nomination or cancellation.

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