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  • All about Kisan Vikas Patra Interest Rate

    The Kisan Vikas Patra(KVP) is a lucrative savings scheme that provides attractive returns to monies invested, almost double the money upon maturity. It is a sort of fixed deposit of instrument that is sold by the Government of India and administered by India Post. It is one of the most preferred savings instrument in the sub-urban and rural areas. The Kisan Vikas Patra can be purchased at any of the designated post offices by payment of cash or cheque. Other negotiable instruments such as Demand Drafts are also accepted.

    Abandoned in 2011, the KVP was reintroduced in 2014 by the Government of India(GOI). Some of the features of this public savings scheme has been elaborated below.

    • The amount invested invested remains frozen for 100 months(8 years and 4 months) making it a long term savings instrument and one of its kind in the country.
    • The amount you invest is doubled at the end of term, earning an interest of 8.7% per annum. This aspect helps immensely for those of you looking for a plan that contributes in meeting long term financial goals.
    • There is no limit on how much one can invest. The KVP is issued in denominations of Rs.1,000, Rs.5,000, Rs.10,000 and Rs.50,000. The member is free to choose a denomination of their choice.
    • A certificate is issued as a proof of investment, redeemable at any of the post offices across the country.
    • The amount invested does not receive any tax benefits under prevailing income tax laws. It cannot be claimed as tax deductions.
    • A TDS(Tax Deduction at Source) is applicable at the rate of 10% from the interest before disbursal.

    Although premature encashment is not permitted before maturity of the term, it is allowed in circumstances such as death of the primary or any of the joint holders and upon forfeiture.

    Who is Eligible to Purchase a KVP?

    Individuals: An adult for himself or to a minor. The adult can also represent the minor.

    Joint Holding: A certificate issued to two adults payable either to both the holders or to either of them or the survivor.

    Who is Eligible to Purchase a KVP?

    The interest rate on Kisan Vikas Patra(KVP) is computed at the rate of 7.8% (with effect from FY 2016-17)on an annual basis for the entire term. Considering the term of 100 months or 8 years and 4 months, the principal investment doubles upon maturity. Let's assume you’ve invested Rs.20,000 and availed a KVP certificate, you will be eligible to receive Rs.40,000 upon maturity before tax deductions(TDS).

    This is an ideal investment product that not only keeps your monies safe during the entire term but also provides attractive returns at the end of the period. If you’ve a long term commitment such as children’s education, buying a house or any such requirements that requires considerable amount of monetary resources, Kisan Vikas Patra helps. Since it is provided by the government, your money is reinvested in welfare and infrastructure projects.

    There are many other saving schemes such as Fixed Deposits that are designed to provide higher returns at short term periods.

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