Kisan Vikas Patra, also recognized as KVP, is fundamentally a savings scheme available at the Indian Post Offices in the form of certificates. This saving scheme functions as a fixed-rate savings plan aiming to multiply your investment after completing a pre-decided period (124 months). You can use this saving scheme to boost your long-term financial plan. Even if there is any other savings plan already added to your investment portfolio, you must not stop exploring other available options. Let us understand in detail what is Kisan Vikas Patra, how it works, its features and benefits, eligibility criteria so that you can make an informed decision.
Categories of Kisan Vikas Patra (KVP)
Kisan Vikas Patra (KVP) is divided into 3 categories, which are:
Category 1 - Joint A
This is allotted to two adult members jointly. The payment of this category is made to either the account holders or the one who lives on till the plan's maturity.
Category 2 - Joint B
This is allotted to two adult members jointly; however, the payment is made to only one holder or who lives until the plan's maturity.
Category 3 - Certificate of Single Holder
This is allotted to a single adult member or on behalf of a minor holder.
Seven Features of Kisan Vikas Patra
Some of the Kisan Vikas Patra scheme's significant features are:
1. Guaranteed returns
The saving scheme was originally made to provide financial relief to the farmers owing to the loss incurred from unexpected weather conditions. This allows the scheme holder to receive the guaranteed sum of returns despite any market fluctuations.
Understand the difference between Guaranteed and Assured Returns.
2. Maturity period
KVP scheme holds a maturity period of 124 months; you can claim your amount after completing this period. However, if you decide not to withdraw your investment, it will continue to receive interest till you withdraw it.
3. Fund protection
The fund you have invested in this scheme is free from any market uncertainties. The scheme owner will be entitled to get the whole investment amount and profit when the policy tenure ends.
4. Interest rate
The interest rate of Kisan Vikas Patra varies according to the number of years you've remain invested in the scheme from the time of purchasing it. KVP scheme currently holds an interest rate of 6.9% for the quarter from January 2021 to March 2021. As the interest gets compound, you will gain more returns on your deposit.
5. Tax deductions
The scheme attracts no tax deductions under Section 80C of the Income Tax Act, and the returns received are fully taxable. Nevertheless, Tax Deducted at Source (TDS) is exempted from withdrawals after the maturity period.
6. Rules on premature withdrawal
Even though the maturity period of the scheme is 124 months, its lock-in period is merely 30 months; before that, you are not permitted to encash the policy, except in the scenario of the account holder's unforeseen death or a court mandate.
7. KVP certification
If you make the scheme's payment in cash mode, you will receive the issued certificate on the spot. However, in the case of a money order, cheque, or demand draft, you will have to wait until the post office receives the amount.
Kisan Vikas Patra - Interest rates
The interest rate of the KVP scheme is subject to frequent fluctuations as per the declarations made by the Finance Ministry. Currently, the interest rate of the scheme is 6.9% per annum which doubles your investment within the tenure of 124 months.
Click here to use - Compound Interest Calculator
Taxability of Kisan Vikas Patra (KVP)
Unfortunately, no tax deductions are attracted under the Kisan Vikas Patra scheme. The interest you receive under the scheme is liable for taxation under the category 'Income from other sources, paid every year. Also, a 10% TDS is deducted from the interest.
Nevertheless, the ultimate value on maturity is exempted from tax deductions.
Who should Invest in the KVP Scheme?
- Any individual of 18 years of age is eligible to purchase Kisan Vikas Patra.
- They can get it from their nearest post office. This saving scheme is majorly preferred by people of the rural sector in India as they don't have a bank account.
- A KVP can be purchased for a minor or purchased in the form of a joint account.
- If purchasing a KVP for a minor, it is essential to mention the name of guardians and the minor's date of birth.
- A trust foundation is also eligible to purchase a KVP. However, a member of the Hindu Undivided Family (HUF) and a Non-Resident Indian is not eligible to buy a Kisan Vikas Patra.
Eligibility Criteria for Kisan Vikas Patra
To meet the eligibility criteria to invest in the Kisan Vikas Patra, you must fulfill the following requirements
- The person applying for the scheme should be an adult residing in India.
- The person investing on behalf of a minor should be his/her guardian or parent.
- NRIs and an undivided Hindu family (HUF) are not eligible to apply for Kisan Vikas Patra.
Documents Required for KVP Saving Scheme Certificate
To acquire the KVP certificate, an applicant of the KVP scheme needs to provide self-attested copies of the following documents:
- For KYC verification - identity proof can be your Aadhar card, PAN card, Voter ID Card, Driving License, or Passport.
- A duly filled KVP application form
- Address Proof
- DOB(Date of Birth) certificate
How Guaranteed Savings Plan by Canara HSBC Life Insurance can Help you get Guaranteed Returns?
For individuals looking for guaranteed returns, Kisan Vikas Patra is an ideal choice presented by India Post Offices. However, if you're not keen on investing in a government-sponsored scheme, you can choose to invest in a Guaranteed Savings Plan.
This plan is the perfect choice for your guaranteed returns requirement. Guaranteed Savings Plan yields you assured returns along with other exceptional benefits. The plan caters to every need in a graceful manner. Here are some of its benefits
- Assurance of guaranteed regular income
- Limited premium payments
- Other assured loyalty additions
The plan additionally offers you the flexibility to choose your savings horizon and tax deductions under Sec 80C of the Income Tax Act. You can opt for either of the plans as both can help you productively plan your savings for a secured future.