Just like any other savings certificate, the Kisan Vikas Patra is a certificate that can be purchased from India Post. This is provided in the form of a savings certificate where that amount that is invested will double in 100 months from then i.e. in 8 years 4 months’ time.
This particular scheme was launched in 1988 by India Post. Though this scheme was successful right from its inception, a committee was setup by the Government of India which gave the recommendation that there were possibilities that the Kisan Vikas Patra could be misused. As a result of this conclusion, this scheme was shut down in 2011, but the new government that formed in 2014 decided to re-launch this scheme.
The Kisan Vikas Patra certificate can be purchased from any Departmental Post Office. The minimum deposit amount is Rs. 1000, there is no maximum limit fixed. This saving certificate can be purchased by an adult for themselves or on the behalf of a minor. It can also be purchased by 2 or more adults and can only be encashed after a minimum of 2 and a half years.
Features and Benefits of Kisan Vikas Patra
There are numerous kisan vikas patra benefits that one can receive by investing in this scheme; some of which are:
- Long term Savings - With the Kisan Vikas Patra, you can start saving early with an amount as low as Rs. 1000. The Kisan Vikas Patra certificates can be bought for amounts as low as Rs. 1000 and going up to as much as you want. There is no upper limit on the amount that you wish to invest. The value is said to be doubled in 100 months i.e. 8 years and 4 months. The value that the holder will receive on the completion of the term is declared on the Kisan Vikas Patra certificate itself.
- 100% Security - We all want security on the investments that we make. The Kisan Vikas Patra scheme gives us just that. Since it is a Government owned scheme, the returns are fixed and secure. Since the amount that you will receive is declared on the certificate, you will have security on the investment that you have made and the amount that you will receive at the end of the term.
- Fixed Rate of Interest - Kisan vikas patra interest rate fixed on the amount that you are investing. This rate of interest ensures doubling of the principal amount in 100 months and is secured since it is a Government bond.
- Collateral for Loan - The Kisan Vikas Patra certificate can be used as a collateral while applying for a loan. Most banks and financial institutions accept this certificate as collateral before issuing you any loan.
- Non-Transferable - The benefits of kisan vikas patra is availed only by the holder of the Kisan Vikas Patra certificate. To have this transferred to another name, the permission of the Postmaster is required along with certain other formalities.
- Tax - Benefits - At the time of encashment or disbursal of the Kisan Vikas Patra scheme, tax is not deducted at source; it is TDS exempted and paid in full to the holder. However, it is the responsibility of the certificate holder to pay the taxes on the interest accrued over the term of the scheme. This scheme is completely exempted from Wealth Tax.
- Physical Instruments of Investment - The Kisan Vikas Patra saving scheme comes as a simple printed certificate that can be saved in a physical form. There is no demat form for this certificate and cannot be traded for in the secondary market.
- Fixed Lock-in Period - The fixed lock in period on this scheme is two and half years. If you have an emergency financial requirement, you can encash this money prematurely after two and half years from the date of issuance with some amount of interest on the same.