Kisan Vikas Patra
Kisan Vikas Patra (किसान विकास पत्र)
is a government-backed investment certificate. The Kisan Vikas Patra (KVP) is like a piggy bank where you can save money for the long term. It started in 1988 to encourage people to save a little money regularly. India Post introduced it as part of the
Ministry of Finance when Rajiv Gandhi was the Prime Minister.
It's like a savings plan where you invest money, and after a set time (currently 115 months), your investment doubles. You can buy KVP certificates from certain public sector banks and India Post Offices.
Even though many people liked it, in 2011,
a group led by Shyamala Gopinath
said that some people were using KVP for illegal stuff like money laundering. So, they stopped the scheme in 2011. But, they made it better and brought it back in 2014. Now, it has some improvements to make it safer and more useful for everyone.
What is Kisan Vikas Patra Scheme?
Kisan Vikas Patra, introduced by
India Post in 1988,
is a small saving certificate scheme aimed at fostering long-term financial discipline. The scheme's tenure has been updated to
115 months (9 years and 5 months).
With a minimum investment of
Rs.1,000 and no upper limit,
investors stand to double their invested amount at the end of the 115th month. Initially designed for farmers to promote long-term savings, the scheme is now open to everyone.
In 2014, the government implemented measures to curb money laundering, requiring PAN card proof for investments exceeding
Rs.50,000.
For deposits of Rs.10 lakh and above, income proofs such as salary slips, bank statements, and ITR documents are necessary.
As a low-risk savings platform,
Kisan Vikas Patra
provides a secure avenue to park funds for a specific duration. Additionally, submission of the Aadhaar number is mandatory for identity verification of the account holder.
Kisan Vikas Patra Scheme Highlights
Interest Rate:
7.5% (grows each year)
Tenure:
115 months
Investment Amount:
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Least: Rs. 1,000
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No maximum limit
Tax Benefits:
Get tax benefits up to Rs. 1.5 Lakh under Section 80C of the Income Tax Act, 1961.
Kisan Vikas Patra Scheme Background
In 1988, Kisan Vikas Patra (KVP)
was started to help out poor families in rural areas who didn't have easy access to banks. In Hindi, Kisan means farmers, Vikas means development, and Patra means certificate. They named it Kisan Vikas Patra because it was meant for farmers to save money, but now anyone can use it.
It doesn't matter if you live in the city or the countryside – everyone can join in. The main idea was to get people to save money for a long time. At first, it worked well, but in 2011, some people thought it might be used for shady stuff like money laundering, so they stopped it.
Then, in 2014, the
Finance Minister, Late Arun Jaitley,
brought it back because people really wanted it and to help folks save more. So, starting from
November 18, 2014,
they started it up again.
Types of Kisan Vikas Patra Accounts
There are three types of Kisan Vikas Patra accounts:
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Single Holder Type A Account:
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This type of account issues a certificate to an adult. An adult can also get a certificate on behalf of a minor, and in this case, the certificate is issued in the minor's name.
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Joint A Type Account:
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In this type of account, a certificate is issued in the names of two individuals, both of whom are adults. At maturity, both account holders would receive the payout. However, if one account holder passes away, only the surviving account holder would be entitled to receive the payout.
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Joint B Type Account:
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This account issues a certificate in the names of two adult individuals. Unlike Joint A Type accounts, on maturity, either of the two account holders or the survivor can receive the payout.
Types of Kisan Vikas Patra Certificates
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Single Holder Certificate:
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Issued to an individual adult or on behalf of a minor.
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Joint A Certificate:
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Issued jointly to two adults.
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Payable to both individuals or the surviving holder(s) upon maturity.
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Joint B Certificate:
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Issued jointly to two adults.
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Payment is made to either of the joint holders or the surviving holder(s) upon maturity.
Kisan Vikas Patra Scheme Benefits
Here are the benefits of the KVP Scheme explained:
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Guaranteed Returns:
Your money in this scheme grows steadily, and it's not affected by ups and downs in the market. This feature encourages people to save more.
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Variable Interest Rates:
The interest rate changes, and it depends on the year you invested. For the financial year 2023-2024, it's 7.5%. The interest you earn is added every year, giving you more returns.
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Investment Duration:
You invest for 113 months, and after that, the scheme matures, giving you a lump sum. If you choose to withdraw later, your money keeps earning interest until you take it out.
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Flexible Deposits:
You can start with just Rs. 1,000 and invest as much as you want. But it has to be in multiples of Rs. 1,000. Deposits over Rs. 50,000 need PAN details and can be done at a city’s head post office.
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Tax Benefits:
No tax is deducted when you withdraw after maturity. However, this scheme doesn't offer tax deductions under Section 80C.
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Nomination Option:
You can choose someone to receive the money if something happens to you. Just fill a form with the nominee's details. You can even choose a minor as your nominee.
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Loan Facility:
You can take a loan against your investment. The KVP certificate works as collateral, and you can get a loan at a lower interest rate.
Kisan Vikas Patra Scheme Interest Rate 2023
The interest rate for Kisan Vikas Patra might change from time to time, depending on Finance Ministry announcements. As of Q3 FY 2023-24, the current interest rate is
7.5% per year,
and this can double your investment in 115 months.
Features of Kisan Vikas Patra Scheme
The Post Office Kisan Vikas Patra scheme is a government-backed fixed return investment plan that guarantees secure returns. Key features of the Kisan Vikas Patra scheme include:
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Certificate Purchase Options:
Available for purchase by a single adult, Joint A Account (up to 3 adults), Joint B Account (up to 3 adults), Minor above 10 years, and an adult or guardian on behalf of a minor or a person of unsound mind.
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Long-Term Savings:
Minimum initial deposit of Rs. 1,000. Invest in multiples of Rs. 100 with no maximum limit. Certificates in denominations of Rs. 1,000, Rs. 5,000, Rs. 10,000, and Rs. 50,000. Allows investment for nearly 10 years, doubling the invested amount for long-term wealth creation.
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Complete Security:
Government-backed instrument ensuring complete security and guaranteed returns. The maturity amount is pre-declared on the certificate, providing assurance on the investment.
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Purchase Locations:
Certificates available at all India Post Offices. KVP application forms accessible online, at India Post Offices, and select banks.
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Collateral for Loan:
Can be pledged or transferred as security for loans. Pledging allowed for specific entities such as the President of India, Governor of the State, RBI, Co-operative Societies, Co-operative Banks, Scheduled Banks, Corporations (public/private), Local Authorities, Government Companies, and Housing Finance Companies.
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Premature Withdrawal Facility:
Premature encashment permitted after two and a half years (2 years and 6 months) under specific conditions, including death of the holder(s), forfeiture by a Gazette officer pledgee, or court-ordered withdrawal.
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Maturity Period:
Maturity period subject to change based on Ministry of Finance rate adjustments. The maturity value is pre-printed on the issued certificate.
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Transfer Facility:
Easy transfer from one Post Office/bank to another and from one person to another.
Who is eligible to invest in the KVP scheme?
Any
Indian citizen aged 18 and above
can purchase a Kisan Vikas Patra at their nearest post office. This scheme is particularly attractive to individuals in rural areas without bank accounts. Additionally, it is possible to acquire a KVP for a minor or through joint ownership with another adult. When purchasing for a minor, it's essential to provide the minor's date of birth and the name of the parent or guardian. While trusts can invest in KVP,
Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible.
The KVP is a favorable option for risk-averse individuals with surplus funds that they may not need in the immediate future. The suitability of this investment depends on your risk tolerance and financial goals.
For those specifically seeking tax-saving options, alternatives like the Public Provident Fund, National Saving Certificates, and tax-saving bank FD schemes may be more suitable. Investors willing to embrace some level of risk might consider the
Equity Linked Savings Scheme (ELSS).
Therefore, it's crucial to align your investment choices with your financial strengths and objectives.
Eligibility Criteria for Kisan Vikas Patra
To invest in the Kisan Vikas Patra scheme, individuals must meet the following eligibility criteria:
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The applicant must be an adult resident of India.
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A parent/guardian is allowed to invest on behalf of a minor or a person of unsound mind.
Ineligible Entities
Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible to invest in Kisan Vikas Patra.
Transfer Process for Kisan Vikas Patra to Another Post Office or Bank
To transfer your Kisan Vikas Patra (KVP) to another Post Office or bank, follow these steps:
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Obtain the
"Application for Transfer of Savings Certificates"
form from the nearest Post Office or bank.
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Complete the form, ensuring the appropriate details are filled in accurately.
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Sign the application if you hold a certificate other than the
'A'
type. For joint account holders, one of them can sign in case of the other's demise.
Transfer of KVP to Another Person
A
KVP certificate
can be transferred to another person under specific conditions, with consent from an officer of the post office/bank. These conditions include:
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To the heir of a deceased person.
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To the court of law, or to any person legally specified by the court.
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From a single holder to the names of joint holders.
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From joint holders to another joint holder.
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From single/joint holders to another individual.
For the transfer to be approved, the following conditions must be met, and consent from
an authorized postmaster/bank officer
is required:
-
The transferee must be eligible to purchase the certificate as per the rules.
-
The transfer must comply with one of the following conditions, and it should occur either after one year from the date of certificate purchase or before completing one year:
a. Casual transfer to a close relative (e.g., husband, wife, lineal ascendant or descendant, brother, sister).
b. Transfer to the heir/nominee of the deceased holder.
c. Transfer to the court of law or to any person specified by the court.
d. Transfer in accordance with pledging the certificate at the Reserve Bank of India, a cooperative society, or a scheduled bank.
e. Transfer in the name of the survivor if one of the joint holders passes away.
Nomination Facility in KVP Scheme
To utilize the nomination facility in the
Kisan Vikas Patra (KVP) scheme,
individuals can complete the KVP Application form at the time of purchasing the certificate. If the nomination option is not chosen during the initial purchase, the single holder or joint holders can avail of this facility later by submitting the same form at any time before the maturity period.
Additionally, if you possess multiple registered certificates acquired on different dates, separate applications for nomination/variation/cancellation must be submitted for each certificate.
Tax Implications of KVP Scheme
While the
Kisan Vikas Patra
is not specifically designed to attract investors seeking tax benefits, it does not offer tax deductions on the principal amount and interest. However, it provides other advantages to investors beyond tax savings.
How to invest in Kisan Vikas Patra
Investing in
Kisan Vikas Patra
is very easy. Here's a simple guide:
Step 1:
Get the form (Form A) and fill in your details.
Step 2:
Give the filled form to the post office or bank.
Step 3:
If an agent helps you, they'll fill out Form A1. You can also download these forms online.
Step 4:
Show your ID and address proof (like PAN card, Aadhaar, voter ID, driver’s license, or passport) for the mandatory verification.
Step 5:
After your documents are checked, make the payment. You can pay with cash, a local cheque, pay order, or demand draft made out to the postmaster.
Step 6:
You'll get a KVP certificate right away, unless you pay by cheque, pay order, or demand draft. Keep this safe because you'll need it when it matures. You can also ask them to email the certificate to you.
In short, if Kisan Vikas Patra sounds good for your money goals, go ahead and invest. It's not complicated—just have the money ready and visit your nearby post office.
Kisan Vikas Patra Scheme Documents Required
To get the Kisan Vikas Patra in 2023, you need some documents. Here's what you'll need:
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Form A:
Fill out and submit this form at the India Post Office or specific banks.
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Form A1 (if using an agent):
If someone helps you apply, they'll use Form A1.
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KYC Documents (ID Proof):
Use documents like Aadhaar Card, PAN Card, Passport, Voter’s ID, or Driving License.
Once you provide these documents, you'll get a KVP certificate. If you lose it, you can ask for a copy from where you got the certificate initially.
KVP Premature Withdrawal
You can take your money out either when it matures or before. If you withdraw within a year of buying, you won't earn any interest, and there might be a penalty.
Kisan Vikas Patra Encashment
To get your money from a Kisan Vikas Patra (KVP), you can do it at the same Post Office where you got the KVP. If you want to do it at a different post office, you'll need to do some paperwork.
Here's what you do to get your money:
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Visit the Same Post Office:
Go to the post office where you got the KVP. If you're doing it at a different post office, be ready for some extra paperwork.
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Provide Identity Slip:
Give them the identity slip they gave you when you got the KVP. It's like your ticket to get your money.
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Write a Letter:
Write a letter to the post office, asking to cash in your KVP. Attach the identity slip to the letter.
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Early Withdrawal:
If you want your money before the maturity date, you can do it after 2 years and 6 months.
Remember, you can also get your money before it matures, but there are specific reasons for that.
Criticism Kisan Vikas Patra (KVP)
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Low Returns:
The highest return you can get from KVP is around 8.7%, which is less than what you could get from Mutual Funds, systematic investment plans (SIP), and other types of investments.
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No Tax Benefits:
The money you make from Kisan Vikas Patra doesn't get any tax deductions under Section 80C of the Income Tax Act. Unlike some other investments that can save you money on taxes, KVP doesn't offer this benefit.
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Lengthy Maturity Period:
If you decide to take out your money within the first year of getting the KVP certificate, not only will you lose the interest, but you'll also face a penalty. Even if you withdraw between one year and two and a half years after buying the certificate, there won't be a penalty, but your interest will be reduced.
