Kisan Vikas Patra is a small saving certificate scheme introduced by the Indian post office in 1988. The main object of the scheme is to encourage people to long term financial discipline. It is a low-risk savings platform, where you can safely park your money for a certain period.
It doubles with a lump sum investment in approximately 10 years & 4 months (124 months) if you purchase the certificate between 1st April, 2020 to 30th June 2020.
An individual can start investment with a minimum amount worth ₹ 1000. The 2014 government made PAN Card proof compulsory for investments above ₹ 50,000 to prevent the possibilities of money laundering.
An investor needs to submit his/her income proofs such as Salary Slips, Bank Statements, and ITR documents if he/she deposits ₹ 10 lakhs and above. In also additions, it’s also mandatory to submit Aadhaar number as proof of identity of the account holder.
Types of Certificates Available
1. Single Holder Type Certificate: This type of certificate is issued to an adult for self or on behalf of a minor or to a minor. Don’t forget to mention the date of birth of the minor and the name of the parent/guardian
2. Joint ‘A’ Type Certificate: This kind of certificate is issued jointly to three adults, payable to both the holders jointly or to the survivor.
3. Joint ‘B’ Type Certificate: This type of certificate is issued jointly to three adults, payable to either of the holders or the survivor.
Eligibility to invest in the KVP Scheme
Any Indian citizen above the age of 18 years can buy a KVP from the nearest post office. A Trust can also buy one, but not a HUF or an NRI.
Features & Benefits of Kisan Vikas Patra
The investor will get the sum guaranteed due to market fluctuations under the scheme. Because this scheme was originally intended for the farming community, the priority was to encourage them to save for rainy days.
It is a safe mode of investment and not subject to market risks, and you will receive the investment and gains when the tenure ends.
Rate of Interest
The effective interest rate for KVP varies depending on the number of years invested in KVP at the time of purchase. KVP Interest rate may change periodically based on the announcements made by the Finance Ministry. The current interest rate applicable to KVP is 6.9% per annum which will double your investment in 124 months.
The maturity period for Kisan Vikas Patra is 124 months, and the investor can avail of the corpus then. The maturity proceeds of KVP will continue to accrue interest until you withdraw the amount.
The investor can withdraw the amount after 124 months. But the lock-in period is 30 months. Encashing the scheme early is not allowed, unless in the account holder’s death or court order.
Ease & affordability
KVP is available in denominations of ₹ 1000, ₹ 5000, ₹ 10,000, and also ₹ 50,000 for investment. There is no maximum limit. However, denominations of ₹ 50,000 are available only at the head post office of a city.
An investor needs to collect a nomination form from the post office and fill up the required information of the nominee. If he/she is nominating a minor, mention the date of birth.
Certificate KVP issuance
If payment is done by cash, then they issue the KVP Certificate on the spot. On another side, if payment is done by Cheque, Demand Draft, or Money Order, then the investor will have to wait till the amount is cleared to the post office.
KVP Identity Slip
This includes the KVP Certificate, the KVP serial number, the amount, the maturity date and the amount to be received on the date of maturity.
Loan against KVP certificate
An investor can use his/her KVP certificate as collateral or security to avail secured loans. The interest rate is comparatively lesser for such loans.
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.
How to invest in Kisan Vikas Patra?
Step 1: Collect the application form (Form A), and fill the form with the necessary information.
Step 2: Then submit the duly filled form to the post office or bank.
Step 3: If the investment in KVP is via an agent, then the agent should fill Form A1, and an investor can download these forms online.
Step 4: KYC process is mandatory, and the investor needs to submit the ID and address proof copy such as PAN, Aadhaar, Voter’s ID, Driver’s License, or Passport.
Step 5: Once the documents are verified, then the investor must make the deposit. The payment can be made by various modes such as cash, locally executed cheque, pay the order, demand draft drawn in the favour of the postmaster.
Step 6: If payment is done in cash then the investor will get a KVP certificate immediately. if the investor makes payment by cheque, pay order, or demand draft, then he/she will be received a KVP certificate after the clearing of the cheque, or amount.
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.
If the nomination is not made at the time of purchase, the single holder, joint holders, or the surviving joint holder can make a nomination at any time after the purchase of the certificate but before the maturity by submitting the duly filled Form C. Then submit it to the postmaster or bank officer where the certificate is registered.
Please note that there is no nomination can be made if the certificate is applied for and held by or on behalf of a minor. If a nomination is made in such a case by the holder or holders of the certificate will be cancelled or altered using Form D.
In some cases when an investor has more than one certificate registered on different dates, he/she have to make separate applications for the nomination, cancellation of the nomination, or variation of the nomination. Such an 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. Subsequent nominations or cancellations will be charged at ₹ 20 application.