What is Kisan Vikas Patra (KVP) Post Office Scheme: Interest Rate, Maturity Period and Details

Kisan Vikas Patra (KVP) is a government savings scheme designed to encourage long-term savings between rural and small investors. KVP is a safe investment option that is administered by the Government of India and administered through post offices across the country which doubles the amount invested in a certain period. Although it provides guaranteed returns, many investors are surprised by its tax benefits and how it can help save taxes.

What is Kisan Vikas Patra (KVP)?

Kisan Vikas Patra is a certain income savings scheme launched to promote financial security in rural areas. It is available to all Indian inhabitants and provides confident returns, making it a preferred option for risks. KVP doubles the invested amount within a predetermined period, as per the prevailing interest rate set by the government. It is a safe and reliable avenue for those looking to grow their savings steadily over time. With features like easy accessibility at post offices and minimal documentation requirements, KVP is a hassle-free investment tool.

So, if you invest ₹1 lakh today, you will get ₹2 lakh after 115 months - no matter what happens in the stock market or economy.

Types of KVP Certificates Available

KVP is issued in different certificate types to suit individual and joint investors:

These certificates can be transferred from one person to another if required.

Documents Required to Apply for KVP

To invest in KVP, you need to submit some basic documents for KYC verification.

• Identity Proof : If one sells the funds within 12 months, 15% capital gains tax levies.

• Address Proof: : Aadhaar Card, Utility Bill, Ration Card, or Bank Statement

• Passport-size Photograph :

• PAN Card (for investments above ₹50,000) :

If you invest more than ₹10 lakh, you might also need to provide proof of income.

How KVP Accrues Interest and Doubles Your Money

Kisan Vikas Patra grows your investment through compounded annual interest at a rate of 7.5% per year (as of 2024). This means the interest is added to your principal every year, helping your money grow faster.

Example Calculation:

Let's say you invest ₹1,00,000 in KVP. Here's how your money will grow:

After 115 months, your money doubles to ₹2,00,000, regardless of economic conditions.

Does Kisan Vikas Patra Help in Tax Savings?

Kisan Vikas Patra (KVP) doesn’t give you tax benefits like PPF or ELSS. The interest you earn is taxable based on your income, but the good part is that no TDS (Tax Deducted at Source) is cut, so you get the full amount. Plus, there’s no wealth tax on it. While it won’t help you save on taxes, it’s still a safe and reliable way to grow your money without any risk.

Careful consideration of these criteria will help you choose an ESG fund that is right for your goals and values you wish to hold dear.

How KVP Compares with Other Savings Options

Key Takeaways

1. If you’re looking for tax savings, PPF, NSC, or Tax Saver FD might be better options.

2. If you just want secure, long-term savings without worrying about tax deductions, KVP is a great choice.

3. KVP is best for people who want guaranteed returns and don’t mind paying tax on the interest earned.

Who Should Invest in Kisan Vikas Patra?

1. Investors who prefer safe and guaranteed returns.

2. People who don’t mind paying tax on interest.

3. Those who have extra savings and want to double their money without market risks.

4. Senior citizens looking for a long-term, risk-free investment.

​Investing in Kisan Vikas Patra (KVP)

1. Locate the Nearest Post Office or Authorized Bank: : KVP is primarily available through India Post offices. Some authorized banks may also offer this scheme. Visit the nearest post office or check with your bank to confirm availability. ​

2. Obtain and Complete the Application Form: : Request the KVP application form from the post office or download it from the official India Post website. Fill in the required details, including your name, address, contact information, and the amount you wish to invest.

3. Prepare Necessary KYC Documents: : "You'll need to submit Know Your Customer (KYC) documents for verification. Acceptable documents include:
   Identity Proof: Aadhaar card, PAN card, passport, voter ID, or driving license.
   Address Proof: Aadhaar card, utility bills, bank statement, or passport."

4. Submit the Application and Documents: : Present the completed application form along with self-attested copies of your KYC documents to the post office or bank official. Carry the original documents for verification purposes.

5. Make the Investment Payment: : You can invest a minimum of ₹1,000, with no upper limit. Payments can be made via cash, cheque, or demand draft. Ensure you receive a receipt for your payment.​

6. Collect Your KVP Certificate: : After processing your application and payment, you'll receive a KVP certificate. This certificate serves as proof of your investment and contains essential details such as the amount invested, the maturity date, and the maturity amount.

7. Safeguard the Certificate: : Store the KVP certificate in a secure place, as it will be required at the time of maturity or if you decide to encash it prematurely.​

Additional Considerations:

1. Enrollment facility : You can design a beneficiary at the time of investment or maturity anytime before. This ensures that investment income is transferred to the nominee in case of unexpected events.

2. Premature Encashment : While KVP has a certain maturity period, premature encashment is allowed 2.5 years after the date of release. However, it is advisable to allow investment mature to get full benefits.

3. Transferable : KVP certificates can be transferred from one person to another. This feature is useful in cases such as gifts or transferring legal heirs.

Can KVP Be Used as Loan Collateral?

Yes! You can use your KVP certificate as security if you ever need a loan. Many banks offer loans against KVP at reasonable interest rates. This makes it a good option for people who may need funds for:

• Farming expenses

• Business expansion

• Medical emergencies

Conclusion

Kisan Vikas Patra is an excellent savings scheme for rural investors who prefer safe and guaranteed returns. Although it does not offer tax deduction under Section 80C, it provides indirect tax benefits by eliminating TD on interest income and allowing long-term capital increase without tax uncertainty.

PPF, NSC, and tax-saving FDS can be a better option for those looking for tax-saved investment. However, if the primary target is the accumulation of funds with minimal risk, KVP remains a strong contender.

Before investing, individuals should evaluate their financial goals and tax liabilities to determine whether KVP aligns with its investment strategy.