Kisan Vikas Patra (KVP)
KisanVikas Patra (KVP) is a saving certificate scheme that was launched in 1988 by
India Post. It is a small saving scheme that focuses on doubling the money of
investors in a period of 112 months or 9 years and 4 months.
Withdrawal and Re-Introduction
The
scheme was quite successful in the earlier years but was closed after the
intervention of the Indian Government in 2011. The closure happened after the
Government of India set up a committee to determine the efficiency of this
scheme under the supervision of Shyamala Gopinath. The findings of the
committee stated that the scheme could be used to accumulate black money
through money laundering.
KisanVikas Patra was relaunched later in 2014, with certain reforms that addressed
the loopholes in the earlier version. It is expected to be beneficial for
investors as it is a government-backed investment option that offers definite
and safe returns.
Developments in Kisan Vikas Patra
The new KVP consists of a number of
regulations and guidelines to avoid any type of misuse. For instance, investors
who want to invest more than Rs. 50,000 have to provide a PAN Card proof.
Investors also have to provide an income source proof if their investments
exceed the limit of Rs. 10 lakhs. The main objective of this scheme is to
secure the financial interests of people residing in semi-urban and rural areas
since people in such areas easily fall for financial scams and related frauds.
Benefits of Kisan Vikas Patra
Guaranteed returns
Regardless
of the market fluctuations, you will get the sum guaranteed. As this scheme was
originally intended for the farming community, the priority was to encourage
them to save for rainy days.
Capital protection
It
is a safe mode of investment and not subject to market risks. You will receive
the investment and gains when the tenure ends.
Interest
The
effective interest rate for Kisan Vikas patra varies depending on the number of
years invested in KVP at the time of
purchase. The current interest rate is 7.3% with effect from 1 January 2018,
compounded yearly. By compounding the interest, you will receive more returns
on your deposit.
Tenure
The
maturity period for Kisan Vikas Patra is 118 months and you can avail the
corpus then. The maturity proceeds of KVP will continue to accrue interest till
you withdraw the amount.
Taxation
It
doesn’t come under the 80C deductions, and the returns are completely taxable.
However, Tax Deducted at Source (TDS) is exempt from withdrawals after the
maturity period.
Rules to premature withdrawal
You
can withdraw the amount after 118 months. But the lock-in period is 30 months.
Encashing the scheme early is not allowed, unless in the account holder’s
demise or court order.
Ease & affordability
KVP
is available in denominations of Rs. 100, Rs. 500, Rs. 1000, Rs. 5000, Rs.
10,000 and also Rs. 50,000 for investment. There is no maximum limit. Please
note that denominations of Rs. 50,000 are available only at the head post
office of a city.
Nomination facility
Collect
a nomination form from the post office, and fill up the required information of
the nominee. If you are nominating a minor, mention the date of birth.
KVP certificate issuance
If
payment is done through cash, they issue the KVP Certificate on the spot. And
for Cheque, Demand Draft or Money Order, you will have to wait till the amount
is cleared to the post office.
KVP Identity Slip
This
includes the Kisan Vikas Patra Certificate, the KVP serial number, the amount, the maturity date and the amount
to be received on the date of maturity.
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