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Kisan Vikas Patra (KVP) is a small savings tool to make it possible for people to invest in a long term savings plan. In 1988 Government of India introduced this scheme. In 2011 a Government committee was formed who suggested that Kisan Vikas Patra (KVP) could be subjected to money laundering. Hence, it was again reintroduced in 2014 with some changes. Such as mandatory PAN card proof for investments over Rs.50, 000 and income source proof for investments exceeding Rs.10 lakhs.
Also, Government is the guarantor of the fixed interest rate offered by the Kisan Vikas Patra (KVP). These changes made the scheme more transparent and extremely safe. So, Kisan Vikas Patra (KVS) is a safe scheme for the investors and only Government sells the KVP scheme. The only place where Kisan Vikas Patra can be purchased is at a post office. This scheme is available only for the Indian citizens. The amount invested in KVP will be doubled in a time of 8 years and 4 months or 100 months.
Types of Kisan Vikas Patra (KVP)
KVP is available in three different types
- Single Holder Certificate- This type of KVP will be issued to an adult or a minor or on behalf of a minor.
- Joint A Type Certificate- This type of certificate will be issued to two adults jointly. The maturity amount is payable to either the individuals or to the nominee.
- Joint B Type Certificate- This type of certificate is issued to two adults. The maturity amount is payable to one of the individual or the nominee listed in the application.
Procedure of purchasing Kisan Vikas Patra (KVP)
One has to purchase KVP offline. Online option is not available for this scheme.
To purchase KVP
- One has to visit nearest post office.
- Ask for the form that is required for KVP
- Fill the form with correct information
- One will be given an identity slip as well. Fill in the identity slip with the same information ones provides on the form as well
- One needs to sign the form before submission
- One would need a witness signature, address of the witness and date in case one is appointing a nominee for the KVP one purchase
Eligibility criteria of Kisan Vikas Patra (KVS)
- The user need to be an Indian resident
- One should be above the age of 18
- Scheme does not apply for a Non-Resident of India (NRI)
- One can purchase KVP either for themselves or on behalf of a minor or a child.
Maturity Period of Kisan Vikas Patra (KVP)
- KVP one purchases will mature in 8 years and 4 On maturity the amount invested gets doubled.
- So the invested amount of Rs. 10,000 will increase to 20,000 after a period of 8 years and 4 months.
Benefits of Kisan Vikas Patra (KVP)
There are multiple benefits of purchasing KVP scheme
- KVP offers multiple denominations that make the scheme even more flexible. The denomination varies from Rs. 100 to maximum 50,000.
- Under KVP, the buyer of the scheme would get double the amount one invests in a short period of eight years and four months.
- KVP is a risk free investment as it is unaffected by inflation as the interest rate remains the same.
- Investors can use the KVP certificate to obtain loan from banks.
- After 2 years and 6 months, the buyer of the scheme can withdraw the amount which is in a premature state.
- KVS is transferable as in the buyer can pass on the account to another holder after completing all required formalities. Also it is important to take the approval by the post office.
- 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 and Guidelines
In 2004 Government relaunched KVP with new set of rules and regulations. Below is the list of KVP rules and guidelines
- ‘Kisan Vikas Patra Rules 2014‘ will be effective the day they are published in the official Gazette.
- As soon as the payment is done one will receive KVP Certificate. The date of the certificate will match the date of the payment. If by any chance certificate is not issued, a provisional receipt will be given in place of the certificate.
- The applicant has to be present at the time of the submission of the form. Modes of payment can be cash, demand draft or a signed withdrawal form or cheque.
- The Kisan Vikas Patra (KVP) can be shifted to the other person with the consent of the postmaster.
- The buyer of the certificate, single holder or joint holder can nominate any other person who can hold the certificate in the event of the death of the certificate holder.
- In case of loss, destroyed and damaged KVP certificate, the member is allowed to apply for a duplicate certificate to the post office or bank where certificate was issued with a detailed application with certificate number, amount and date. With proper verification even a duplicate certificate can be treated as an original certificate.
- The minimum lock period of Kisan Vikas Patra (KVP) is two and half years. It can be encashed anytime after the lock period under the circumstances such as death of the holder or any of the holders in case of Joint account holder.
KVP – A Transferable Account
According to one’s needs Kisan Vikas Patra (KVP) can be transferred. It can be transferred in two ways:
- From one post office to another
- From One person to another
From One Post Office to Another
To transfer the from one post office to another, one has to go through a form set down by the Post’s Director General at either of the post offices. This procedure will be done by both the owner of the account. In case of one owner is deceased, the other owner can proceed with the program alone.
From One Person to Another
- To transfer the KVP account to the other person, consent from the post master and sub postmaster is required.
- It can also be transferred from the deceased owner’s name to the next beneficiary.
- The certificate can be transferred under the laws of the court.
- The transfer can also be done from one owner to a set of combined owners.
- One needs to provide address and identity proof in the time of transferring the account.
- In case the value of the certificate is more than 50,000 then PAN of the transferee is also required.
Features of Kisan Vikas Patra (KVP)
- KVP is convenient as it is available in different denomination from Rs. 100 to the maximum of 50,000.
- As the scheme is under Government, it has low investment risk. Also, the holder receives double the investment after eight years and seven months.
- The scheme has a locked in period of two and half years. Which means one can utilise the fund after the lock in period.
- KVP has the facility of Tax deduction at Source (TDS). This means there is not tax deduction on the entire amount received by the holder at the maturity.
- One should be above the age of 18 years to enrol in this scheme.
- PAN card is not required to make deposits under Kisan Vikas Patra scheme.
Loan on Kisan Vikas Patra (KVP)
KVP acts as great collateral against which one can take a loan from banks and other financial institutions. In this scheme one can apply for a loan for various reasons, which has the scheme in his / her name. The loan amount depends on the bank one is applying for with the maturity period of the scheme. The interest rates of Kisan Vikas Patra keep on changing from time to time. Banks usually charges processing fee and different banks charges different fees.
In a Nutshell
- Kisan Vikas Patra (KVP) is a small saving scheme offered by Indian Post Office and approved by Indian Government.
- Money invested in this scheme doubles in eight years and four months.
- Premature withdrawal is allowed under KVP
- It is one of the safest investment as it is backed by the Indian Government
- One can prematurely close the account after the lock period of two years and six months.
- It is available on all the denomination starting from Rs. 100 – Rs. 50,000
- To enrol in this scheme Know your Customer (KYC) is required along with identity proof and address proof.
- Someone interested in this scheme can open their account in the post office nearest to them.
- Scheme is available only for the Residents of India. NRIs cannot invest in KVP.
- Any individual or joint or minor through guardian can hold the account.
- The account can be transferred from one person to the other or from one post office to the other and can do so any number of times.
Recently, the Government has decided to cut down interest rates on small savings schemes which also includes KVP (Kisan Vikas Patra) by 0.2 percentage points for the January – March quarter. This move has been taken to prompt the banks to lower the deposit rates.
Government of India have decide to go digital in issuing NSC (National Savings Certificate) and KVP (Kisan Vikas Patra), which are very popular savings schemes in India.
NSC (National Savings Certificate) is a good saving scheme for low risk appetite investors, which is provided by the India Government through Post offices. And it usually has a maturity period of five to ten years. It is also eligible for tax deduction under Section 80 C. The rate of interest offered on NSC is 8.1%.
KVP (Kisan Vikas Patra) is also a risk free investment scheme which gives a stable income. Under this scheme money doubles in 100 months and interest is compounded annually. This scheme is provided by the Indian Government through post office. Kisan Vikas Patra does not offer any income tax benefits to the investors. However, withdrawals are exempted from Tax Deduction at Source (TDS) upon maturity. The rate of interest offered on KVP is 7.8%.
Earlier both KVP and NSC were issued in the form of pre – printed physical certificates. However, pre – printed physical certificate have been discontinued by the government from July 2016.
Instead of pre – printed NSC and KVP certificate, the certificates will be recorded in two modes i.e. e – mode (electronic mode) or in Passbook mode.
How to buy NSC and KVP Certificates in Electronic mode (e – mode)
Follow the below mention guidelines in order to opt for the certificates in electronic form
You can easily buy KVP and NSC certificate in e – mode if you have a savings bank account with bank / post office.
You are required to have secured internet banking. In case you don’t have a savings account or internet banking, you will have to apply for the both before the purchase of NSC and KVP.
In NSC (National Savings Scheme), the minimum amount you can invest is Rs. 1,000.
In KVP (Kisan Vikas Patra), the minimum amount you can invest is Rs. 100.
NSC and KVP Certificate in Passbook Mode
If you don’t want to purchase the certificates in electronic mode, you can opt for Passbook Mode i.e. you can buy NSC and KVP and the same will be recorded in Passbook manually. Where the official would authorize the passbook with physical signature (in blue ink).
In case a customer wants to shift the mode from Passbook to electronics, he would require submitting his passbook at the post office, where the officials would destroy the passbook after cancelling the pages.
In case you lose your physical NSC and KVP certificate, passbook will be given in lieu of pre-printed NSC or KVP. The old certificate number may be noted in this case, on the passbook issued.
Transfer of KVP/NSC certificates from one post office to another and from one bank branch to another shall continue as per the existing rules and guidelines.
Also, once you have purchased KVP and NSC, it cannot be transferred.
Closure or Pre mature Closure Procedure of KVP and NSC
During the closure, the passbook should be given to the officials and the issued amount will be obtained in the passbook. The officials would cancel all the pages by drawing in red lines followed by dated signatures of authorized official with designation stamp. After that passbook will be torn and preserved as a closed voucher.
List of banks offering KVP and NSC in Electronics and Passbook mode
- Andhra Bank
- Axis Bank
- Bank of Baroda
- Bank of India
- Canara Bank
- Central Bank of India
- Corporation Bank
- Dena Bank
- HDFC Bank
- ICICI Bank
- IDBI Bank
- Indian Bank
- Indian Overseas Bank
- Punjab national Bank
- State Bank of India
- State Bank of Bikaner and Jaipur
- State Bank of Indore
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Saurashtra
- State Bank of Travancore
- Syndicate Bank
- UCO Bank
- Union Bank of India
- Vijaya Bank
Recently, government has decided to cut down interest rates on small savings scheme which also includes NSC (National Savings Certificate) and KVP (Kisan Vikas Patra) by 0.2 percentage points for the January – March quarter. This move has been taken to prompt the banks to lower the deposit rates.