About Kisan Vikas Patra
Kisan Vikas Patra is a small savings instrument that will facilitate people to invest in a long term savings plan. This scheme was originally introduced by the Government of India in 1988 and was again reintroduced in 2014 with some changes. Even though this scheme was popular, a Government Committee formed in 2011 suggested that KVP could be misused for purposes like money laundering. In 2014, Kisan Vikas Patra was relaunched with a number of changes including mandatory PAN Card proof for investments over Rs.50,000 and income source proof for investments exceeding Rs.10 lakh. The main advantage of opening a KVP investment is the availability and ease of process - the Small Savings Directorate offers KVP certificates in all Post Offices across the country. Any resident Indian can invest in a KVP scheme and can obtain a certificate either jointly, individually or in the name of a minor. The principal amount invested in KVP will be doubled in a time of 8 years and 4 months or 100 months. The main target audience for this scheme is people in semi-urban and rural areas where people easily fall prey to Ponzi schemes.
With an effective interest rate of 8.7%, Kisan Vikas Patra is was becoming a popular investment instrument given that it is of low-risk and also guarantees assured returns. However the interest rates have been slashed to 7.8% in the 2016 Union Budget which will have its effect in FY 2016-17.
Below is the timetable for change in interest rates for all Post Office Savings Schemes.
|S.No||Quater for which rate of interest would be effective||When it will be noticed||Rate of interest to be based on FIMMDA month end G-sec. rate pertraining to|
|1||April -June||15th March||Dec-Jan-Feb|
|2||July - September||15th June||Mar-Apr-May|
|3||October - December||15th September||Jun-Jul-Aug|
|4||January - March||15th December||Sep-Oct-Nov|
Now as per the schedule, Government announced the interest rate applicable to all Post Office Savings Schemes from 1st April 2017 to 30th June 2017.
|Instruments||Interest Rate 2015-16||Interest Rate (Q1 & Q2) 2016-17||Interest Rate (Q3 & Q4) 2016-17||Interest Rate (Q1 of 2017-18)|
|Kisan Vikas Patra (KVP)||8.7||7.8*||7.7**||7.6***|
Kisan Vikas Patra online
If you are planning to invest in Kisan Vikas Patra savings scheme, you can do so by visiting the nearest Post Office. Currently, you can not apply for Kisan Vikas Patra online. The application form for Kisan Vikas Patra is available online for the benefit of investors. Also, tools like Kisan Vikas Patra Calculator, procedure of application, interest accrual chart and transfer of KVP can be found online.
Process to Apply for Kisan Vikas Patra
The process to invest in the Kisan Vikas Patra scheme is simple. First, you must obtain the KVP application form i.e. Form-A, from the post office, fill it in correctly, and submit it at the post office. In case you are making an investment with the help of an agent, the agent must fill in Form-A1. These two forms i.e. Form-A and Form-A1 are available online and can be downloaded. For the Know-Your-Customer (KYC) process, you will be compulsorily required to furnish a copy of your identity proof such as your Driving Licence, Aadhaar Card, PAN Card, Voter ID Card, or Passport. Once the documents provided have been verified and you have made the deposit for the investment, your KVP Certificate will be issued. Ensure that you keep your certificate safely as it will be required when the scheme matures. There is also a provision of receiving the KVP certificate by email.
Kisan Vikas Patra eligibility
The following are the eligibility criteria for Kisan Vikas Patra.
- The applicant must be an adult and a resident Indian.
- The applicant can apply for Kisan Vikas patra on his own name or on behalf of a minor.
- Trusts are eligible to invest in Kisan Vikas Patra. HUFs (Hindu Undivided Family) and NRIs are not eligible to invest in KVP.
Kisan Vikas Patra Types
A Kisan Vikas Patra comes in the following types.
- Single Holder Type Certificate
This KVP type is issued to an adult for himself or to a minor or on behalf of a minor.
- Joint A Type Certificate
This is issued to two adults jointly and is payable to both the owners or to the survivor.
- Joint B Type Certificate
This Type B Kisan Vikas Patra is issued jointly to two adults and is payable to either of KVP holders jointly or to the survivor.
KVP, when of Type A and Type B, is released to both the combined owners. In case the adulthood is due to both the heir and owners or due to either of the heirs, it is released to combined owners.
Kisan Vikas Patra Interest rate
The interest rate for Kisan Vikas patra varies depending on the total number of years that the applicant wishes to invest for at the time of purchase. If the investor purchases KVP certificates for Rs.20,000 and opts for a period of eight years and seven months, the investor will receive Rs.40,000 as maturity. It is important to note that the lock-in period for KVP saving schemes is two years and six months. The principal amount can be withdrawn after this period only.
The interest rate for the old KVP scheme that was originally introduced in 1988 was between 8.2% to 8.4%. The 2014 Kisan Vikas Patra Scheme has an interest rate of 8.7% and the money doubles in 100 months, that is 8 years and 4 months. But the current rate has been changed from 8.7% to 7.8% which is a drop by 1.1%.
|KVP - Kisan Vikas Patra Interest Rate Chart for an investment amount of Rs.1000|
|Year Wise Accrued Incomes||15/1/2000 to 28/2/2001||1/3/2001 to 28/2/2002||1/3/2002 to 28/2/2003||1/3/2003 and later|
|1st year||N. A||N. A||N. A||N. A|
|2nd Year||N. A||N. A||N. A||N. A|
|2 years and 6 months||Rs. 1246||Rs. 1209||Rs. 1195||Rs. 1170. 51|
|3 years||Rs. 1302||Rs. 1274||Rs. 1256||Rs. 1207. 95|
|3 years and 6 months||Rs. 1407||Rs. 1327||Rs. 1305||Rs. 1267. 19|
|4 years||Rs. 1478||Rs. 1409||Rs. 1382||Rs. 1310. 80|
|4 years and 6 months||Rs. 1585||Rs. 1470||Rs. 1439||Rs. 1355. 90|
|5 years||Rs. 1668||Rs. 1572||Rs. 1534||Rs. 1435. 63|
|5 years and 6 months||Rs. 1779||Rs. 1644||Rs. 1602||Rs. 1488. 49|
|6 years||Rs. 1874||Rs. 1770||Rs. 1672||Rs. 1543. 30|
|6 years and 6 months||Rs. 2000||Rs. 1857||Rs. 1800||Rs. 1649. 13|
|7 years||Rs.||Rs.||Rs. 1883||Rs. 1713. 82|
|7 years and 3 months||N. A||Rs. 2000||N. A||N. A|
|7 years and 6 months||N. A||N. A||Rs.||Rs. 1781. 06|
|7 years and 8 months||N. A||N. A||Rs. 2000||Rs.|
|8 years or more but less than 8 years and 7 months||N. A||N. A||N. A||Rs. 1850. 93|
|8 years and 7 months||N. A||N. A||N. A||Rs. 2000|
After the new scheme was introduced in 2014, the interest rate was revised to 8.7% per annum and hence, the principal doubles faster when compared to the old KVP scheme. The following tables gives an idea of how the interest accrues according to KVP 2014.
|Time (investment of Rs.1000)||Amount Repaid|
|2 .5 years but <3 years||1201|
|3 years but <3.5 years||1246|
|3 .5 years but <4 years||1293|
|4 years but <4.5 years||1341|
|4 .5 years but <5 years||1391|
|5 years but <5.5 years||1443|
|5.5 years but <6 years||1497|
|6 years but <6.5 years||1553|
|6.5 years but <7 years||1611|
|7 years but <7.5 years||1671|
|7.5 years but <8 years||1733|
|8 years but before the maturity||1798|
|on 8 years & 4 months (=100 months)= Money doubled||2000|
Kisan Vikas Patra maturity period
The maturity period for Kisan Vikas Patra that was introduced in 2014 is 8 years and 4 months. On maturity, the amount invested gets doubled. If you invest an amount of Rs.10,000, after a period of 8 years and 4 months, the amount will increase to Rs.20,000. The effective interest rate of Kisan Vikas Patra comes to around 8.7% although the current rate has been drastically slashed to 7.8%.
Kisan Vikas Patra Form
In order to purchase a Kisan Vikas Patra certificate, one must fill in the application form and furnish the required information. The required information must be provided in the identity slip also. In the application form, you will be required to mention the following details.
- The amount for which KVP certificate is to be purchased.
- The method of payment which can be either cash or cheque
- Type of KVP certificate, whether it is single or joint “A” or joint “B”
- The name of combined owners if KVP type is not single
- In case of minor, the date of birth of the minor and his guardian who can encash KVP amount.
- Name of all nominees with full address and date of birth
This form must be duly signed by the investor, The date, address and signature of witness to nomination will also be specified in the slip.
In the identity slip, information like the serial number of KVP certificate, issue price, date of encashment, postmaster signature and remarks like that of duplicate issue and transfer will be mentioned. To encash the KVP, one must present the identity slip. Hence, mentioning the right details in KVP identity slip and KVP Form is of utmost importance.
Kisan Vikas Patra Benefits
The following are some of the benefits of Kisan Vikas Patra Scheme.
- A KVP certificate is offered in multiple denominations that gives flexibility to the customers. The denominations vary from Rs.100 to a maximum of Rs.50,000.
- It is a scheme offered by the Government of India and hence the investor can be sure of returns on invested amount. Under KVP, the holder will get double the principal in a short period of eight years and four months.
- People who are looking for risk free investment option will benefit from KVP scheme. Also, it is unaffected by inflation as the interest rate remains the same.
- There is no cap on the amount that one can invest in KVP. Depending on the purchase power, a person can buy any amount.
- Kisan Vikas Patra certificate can be presented as collateral against loans. Investors can use the same to obtain a loan from banks.
- Applicants also have the option to withdraw the amount prematurely in KVP. The lock in period is two years and six months.
- Kisan Vikas Patra is transferable from one person to the other. To pass on the benefits to the new holder, the owner must fulfill all required formalities. Before transferring it to a new holder, it is important to receive an approval at the post office.
- A KVP holder can enjoy tax benefits. The income from KVP is taxable but there is no tax deduction on entire money received at maturity, there is no tax deduction at source.
KVP Rules & Guidelines
After relaunching KVP in 2014, the Government of India also have specified a set of rules and guidelines for the same. As an KVP investor, you must be familiar with the KVP rules and they are given below for your reference.
- Title and commencement - All rules with regard to KVP scheme will be called the “Kisan Vikas Patra Rules, 2014” and will be effective the day they are published in the Official Gazette.
- The definition of certain words in the rules, unless the context otherwise requires,, will mean the following:
- Act - Government Savings Certificate Act, 1959
- Cash - Indian Cash currency
- Certificate - Kisan Vikas Patra
- Form - Form annexed to these rules
- Post Office - Any departmental post office in India doing Savings bank work
- Identity Slip - an identity slip issued to the holder of certificate
- Bank - Any branch of the State Bank of India, all its associate banks and designated branches of commercial and nationalized banks that are authorised for the Public Provident Fund Scheme.
- Denomination of Certificates - Kisan Vikas Patra scheme certificates will be issued in denominations of rs. 1,000, Rs. 5,000, Rs. 10,000 and Rs. 50,000 only.
- Application of Post Office Savings Certificate Rules, 1960 - The process of application for the Kisan Vikas Patra remains unchanged and is same application process as that of the Post Office Savings Certificate Rules, 1960.
- Purchase of the Certificate - Any number of KVP certificates of the specified denominations can be purchased.
- Type of Certificates - The certificate for Kisan Vikas Patra can be issued as one of the following types:
Single Holder Certificate - This certificate is issued to an adult for himself or on behalf of a minor ot to a minor.
Joint ‘A’ Type Certificate - This type of certificate is issued jointly to two adults and is payable to both the holders jointly or to the survivor.
Joint ‘B’ Type Certificate - This type of certificate is issued jointly to two adults but payable to either of the two holders or the survivor.
- Issue of Certificate - The KVP certificate is issued as soon as the payment is made. The date of the certificate is the same as date of the payment. If for any reason, the Kisan Vikas Patra Certificate cannot be issued immediately, a provisional receipt is issued which can be later exchanged for a certificate.
- Procedure of Purchase of Certificate - The applicant needs to be present and submit an application form, to buy a Kisan Vikas Patra certificate. The payment for this certificate can be made by cash, a demand draft drawn in favor of the Postmaster or a signed withdrawal form or cheque.
- Transfer of Kisan Vikas Patra Certificate from one person to another person - A Kisan Vikas Patra can be transferred from one person to another person by writing to the postmaster requesting for the same. Following are the cases in which the transfer can be sanctioned (i) from the name of the deceased to their legal heir (ii) from a single holder to the names of the joint holder (iii) from a holder to the court of law or another person under the orders of a court of law.
- Pledging of Kisan Vikas Patra Certificate - On an application made in Form B by the transferor and transferee, the Postmaster may allow the transfer of any certificate as security at any time to (i) the President of India or Governor of State (ii) The RBI or a Scheduled Bank or a Cooperative Society including a Cooperative Bank (iii) a Government agency or a Corporation (iv) a Housing Finance Company approved by the National Housing Bank and notified by the Central Government of India (v) a local authority; provided that the transfer of the certificate on behalf of a minor shall not be permitted under this rule.
- Nomination - The purchaser of the certificate, single or joint holder can nominate any person who in the event of the death of the certificate holder shall be entitled to hold the certificate. The payment of the amount will be made to the nominee at the maturity of the scheme.
- Post Maturity Interest - When the repayment of the amount is, inclusive of interest is due and has not been made, the interest on the amount due shall be allowed under the following conditions:
- It will be simple interest and calculated at the rate applicable from time to time to Post Office Savings Account.
- Any part of the period, for the purpose of payment of interest, that is less than one month shall be ignored.
- The depositor can receive the interest in lump sum at the time of repayment of the due amount.
- Replacement of destroyed or Lost Certificate - If a Kisan Vikas Patra certificate is lost, damaged or destroyed, the person can apply for a duplicate of the same to the post office or the bank where the certificate was issued. If the application has been made to a post office or bank where it was not issues, the application will be forwarded to the right location. The application should have the certificate number, amount and date and the circumstances of destruction, defacement or loss. A duplicate certificate issued can be treated as an original certificate for all purposes except that it won’t be encashable without prior verification.
- Place of encashment of Kisan Vikas Patra - The certificate can be encashed at the post office or the bank where it was issued. It can also be encashed at another post office or bank provided the issuing authority is satisfied with the verification from the location of issue and the person holding the certificate that needs to be encashed.
- Encashment of Kisan Vikas Patra on Maturity - For any denomination of certificate issued, the period of maturity will be eight years and four months commencing from the date of issue of the certificate. The amount inclusive of interest which is payable while encashing a certificate after the expiry of the maturity period will be double of that of the deposited amount.
- Premature Encashment of Kisan Vikas Patra Certificate - The certificate can also be encashed before the completion of the maturity under certain circumstances such as the death of the holder or any of the holders in case of a joint holder, when ordered by a court of law or on forfeiture by pledge being a Gazetted Government Officer. The minimum lock in period for this scheme is two and half years and can be prematurely encashed any time after this period. The simple interest is calculated on the rate from time to time under the scheme.
- Discharge of Certificate - On the encashment of the certificate, the holder will sign at the back of the certificate as a sign of having received the payment.
- Rectification of mistakes - Any clerical and arithmetical mistakes with regard to the certificate can be rectified by the Postmaster General provided it does not cause any financial loss to the Government.
- Power to relax - If a holder is facing an undue hardship, the rules may be made flexible for them on humanitarian grounds, that is not inconsistent with the Act, if recorded in writing and approved by the Central Government.
Kisan Vikas Patra Encashment
If you wish to encash a Kisan Vikas Patra Certificate, you can avail the same at the Post office where KVP was issued. In case you need to encash it at a different post office, some formalities has to be completed. In order to encash a KVP, you need to submit the identity slip that was offered at the time of KVP certificate purchase.
To encash a KVP certificate, all you have to do is give a letter in writing to the concerned post office and also present your identity slip.
Kisan Vikas Patra pre-mature Encashment
If you wish to pull out your principal before maturity period, you can do so only after 2 years and 6 months.
Kisan Vikas Patra can also be prematurely encashed before its maturity under the following circumstances.
- If ordered by a Court of law
- On forfeiture by a pledge or by a Gazetted Officer
- In case of joint holders, on death of the holder or any of the holders
How to transfer Kisan Vikas Patra Account?
A Kisan Vikas Patra certificate can be transferred from one Post Office to the other or from one person to another.
- Transfer from one post office to Another
A Kisan Vikas Patra certificate can be transferred from one post office, from where it was originally bought to another post office. In order to transfer a KVP certificate, the investor must submit a handwritten consent to the officer at concerned post office. The transferee must be a resident Indian and must be eligible to purchase the KVP certificates.
- Transfer from One Person to Another
A KVP certificate can also be moved from one individual to another and a written letter must be submitted to the Post Office for the same. The following conditions/specifications apply for the same.
- Transfer from name of deceased to his heir
- Transfer from the company to the employee on behalf of it was bought.
- From one owner to the combined owners
- From combined owners to name of one of the owners
- From the owner to a judge of law and also to other individuals as ordered by a Court of Law.
Kisan Vikas Patra premature withdrawal
A Kisan Vikas Patra scheme can be closed before the maturity and the principal , along with the interest can be withdrawn, The period for premature withdrawal of KVP is two years and six months which is also the lock in period.
To avail pre-mature withdrawal, the holder must give in writing to the Post Office following which the amount will be given.
Loan against KVP
A holder of Kisan Vikas Patra can avail a loan against the same. Following are the conditions for availing a loan against KVP.
- The loan applicant must have a Kisan Vikas Patra under his own name.
- The loan against KVP can be availed for business or personal purposes only. The loan cannot be availed for any speculative ones.
- Different banks have different charges and interest for loans against KVP. The charges vary from time to time and select banks may charge processing fee for loan grant.
- The loan should be repaid within the tenure of KVP which is 8 years and 4 months.
- The margin and loan amount will be decided by the bank based on the KVP investment and maturity.
1. I have lost my KVPs. What is the process to obtain a duplicate certificate?
To obtain a duplicate KVP certificate, you need to write to the Post Office of KVP issue requesting a duplicate certificate and attach the identity slip that was given at the time of issue. The identity slip will prove your ownership of KVPs. If you have lost or misplaced the identity slip, please contact the Post Office of issue for further instructions.
2. Can I invest Teachers’ Provident Fund in Kisan Vikas Patra scheme?
No, Teachers’ Provident Fund are not eligible to be invested in KVPs.
3. I have shifted to a different city. Can I encash my KVPs at the Post Offices here other than the Post Office of issue?
Kisan Vikas Patra can be encashed at any Post Office if your identity slip is accepted and if it is confirmed by the Post Office that you are the rightful owner. Ideally, it would be a lot more easier for you if you could encash your KVP at the Post Office of issue.
4. Are Co-operative Societies and Co-operative Banks allowed to invest in Kisan Vikas Patra (KVP)?
No, Co-operative Societies and Co-operative Banks are not allowed to invest in Kisan Vikas Patra (KVP).
5. Can NRIs and HUFs invest in the KVP scheme?
No, KVP scheme is open only for resident individuals. NRIs and HUFs are not eligible to invest in Kisan Vikas Patra.
6. Are there any restrictions in terms of the amount that can be invested in Kisan Vikas Patra?
No, there are no restrictions in terms the investment amount. There is, however, a minimum limit, which is Rs.1000. Which means that one must invest a minimum of Rs.1000 in the scheme. Thereafter, one can invest in denominations of Rs.1,000, Rs.5,000, Rs.10,000, and Rs.50,000. Also, there is no limit put on the number of certificates that an individual can hold.
7. What is the maturity period of Kisan Vikas Patra (KVP)?
This scheme comes with a maturity period of 8 years and 6 months.
8. What is the current rate of interest that can be earned with this scheme?
The current rate of interest applicable on this scheme is 7.7%. This rate is calculated on an annual basis and the new interest rate came into effect from 1 Oct 2018.
9. What will be tax benefits for investing in Kisan Vikas Patra (KVP)?
The returns received from the Kisan Vikas Patra are not eligible for any tax deductions under Section 80C of the Income Tax Act. However withdrawals made after the maturity of the scheme are exempt from Tax Deducted at Source (TDS).
10. How long does it take for the Kisan Vikas Patra to be issued?
If an applicant has purchased a Kisan Vikas Patra by making payment for it in cash, they will be issued the certificate immediately. But, if the purchase has been made by cheque, pay order, or Demand Draft, then the date of issue of the certificate will be the date on which payment made using any of these instruments has been realised. However, if, despite making the payment, you have not been issued your KVP certificate, you will be provided with a provisional receipt for the same. When the actual certificate is issued at a later date, the applicant must exchange the provisional receipt with the KVP certificate. In such cases, the date of issue of the KVP shall be the date on which the provisional receipt had been issued.
11. Can the Kisan Vikas Patra be transferred from one person to another?
Yes, a Kisan Vikas Patra can be easily transferred from one person to another. This can be done by providing a written letter of consent to the Post Master. In order to transfer, the original certificate holder is to submit the original KVP certificate. The new certificate that is issued will bear the name of the transferee i.e. the person in whose name the certificate has been transferred. Transfer of certificate from one person to another will not be permitted if the Certificate is held either on behalf of a minor (till they are alive) or by a minor themselves.
12. What happens if the certificate is not encashed after the scheme reaches maturity?
In case the certificate is not encashed after the scheme reaches maturity, then the scheme holder will be entitled to the post office savings interest, at the rate applicable on the entire payable maturity amount, at the given time. If the certificate is encashed within a month after maturity of the scheme, no interest shall be paid.
13. Where can one encash a Kisan Vikas Patra (KVP)?
A kisan Vikas Patra can be encashed by the certificate holder at the bank or post office where the certificate is registered.
14. How will the maturity amount be paid?
On maturity if the scheme, the payable amount shall be credit directly to the bank/post office savings account of the certificate holder. Therefore, it is important that the certificate holder have a savings account when they are looking to encash their certificate.
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