Kisan Vikas Patra (KVPs): The Indian Postal Service offers a certificate programme called Kisan Vikas Patra. You could assert that it will enable you to double your investment in 10 years, and 4 months (124 months). However, it all depends on the timing of your Kisan Vikas Patra investment. In this article, we shall go into detail regarding each of these aspects of Kisan Vikas Patra. The rate of interest you can earn under this scheme currently is 6.9%.
Table of contents
What is Kisan Vikas Patra
A savings programme provided by the India Post is called Kisan Vikas Patra, or KVP for short. Kisan Vikas Patra (KVP), a savings certificate programme first offered by the Indian Post in 1988, promotes the general public to make small, long-term investments in order to safeguard their future. Indian post offices and a few public sector banks sell KVP certificates for purchase. There is no maximum investment restriction while opening a KVP account; a deposit of at least Rs. 1000 and any amount in multiples of Rs. 100 is required.
Now, it is mandatory for all to submit Aadhaar number and PAN number for investment in Kisan Vikas Patra. However, the PAN is mandatory for the investment above Rs.50,000/-. The persons who want to invest above Rs.10 Lakh must submit their income proofs like bank statements, income tax returns, salary accounts etc.
Who Can Apply KVP?
Persons eligible to Apply Kisan Vikas Patra: The following persons are eligible to apply for Kisan Vikas Patra.
- Any adult individual can purchase KVPs in his own name (single holder type) or jointly with another individual with the condition ‘jointly or survivor’ (A Type) or ‘either or survivor’ (B type).
- An adult individual can purchase KVPs (single holder type) on behalf of a minor. Besides, a minor can also purchase KVP for himself.
Where to Apply KVP?
You can apply Kisan Vikas Patra in Post Office or any Public Sector Bank including ICICI Bank, Axis Bank and HDFC Bank. KVPs are issued by all departmental Post Offices authorised to transact savings bank business and all public sector banks and ICICI Bank, Axis Hank and HDFC Bank authorised for this purpose.
How to Apply?
Procedure to Apply for Kisan Vikas Patra: The procedure to apply Kisan Vikas Patra is very simple. Please check the below to steps to apply for KVP.
- The application in Form 1 along with payment has to be deposited with the Post Office directly or through its authorised agent.
- The payment is to be made in cash or by cheque/pay order/ demand draft or by presenting a withdrawal form along with the passbook of a Post Office Savings Bank Account.
- The applicant should submit Aadhaar Card to apply for Kisan Vikas Patra.
- If the amount is above Rs.50,000 then the applicant should also submit his PAN Card.
- If the amount is above Rs.10 Lakh then the applicant should also submit Income proof like Income Tax Returns, Salary Account and Bank Account etc.
Aadhaar Number for KVP
- An applicant should furnish his Aadhaar Number or proof of enrolment for Aadhaar, at the time of application of Kisan Vikas Patra.
- Ex1stmg KVP holders are also required to furnish their Aadhaar numbers latest by 31.3.2018.
Nomination in KVP Account
- The facility of nomination is available on all KVPs (including the joint holder type), except for the KVPs purchased by or on behalf of a minor.
- W.e.f.1.7.2016, KVPs may be issued for any amount above Rs. 1000 and in multiples of Rs.1000.
- One transaction of an investor on a day shall result in on certificate in e-mode or one entry in the passbook.
- Earlier, KVPs were in the denominations of Rs.1,000, Rs. 5,000, Rs.10,000 and Rs. 50,000.
- W.e.f. 1.7.2016, physical pre-printed certificates shall be discontinued and KVPs shall be issued either in exclusive electronic mode or passbook mode.
- Issue of KVP shall be conveyed to the investor electronically (by e-mail/on mobile).
- KVP in e-mode can be accessed online only by the investor through electronically secured means. Under Passbook mode, KVP shall be issued in the prescribed format printed on a passbook under the signature of the authorized official.
KVP Maturity Period
- A KVP shall mature after 10 years and 4 months [Vide M.F., Notification No.GSR 283(E) Dt.05-05-2020, O.M. No. 01-04-2019-NS, Dt. 30-06-2020, 30-09-2020 and 30-12-2020.]
- 9 years and 5 months for KVPs issued from 12-12-2019 to 31-03-2020
- A Kisan Vikas Patra shall mature after 9 years and ten months [9 years and 7 months for KVP is issued from 1.7.2017 to 31.12.2017,
- 9 years and 5 months for KVP is issued from 1.4.2017 to 30.6.2017,
- 9 years 4 months for KVPs issued from 1.10.2016 to 31.3.2017,
- 9 years and two months for KVPs issued from 1.4.2016 to 30.9.2016,
- 8 years and four months for KVPs issued up to 31.3.2016] from the date of issue.
- The amount payable on maturity up to the KVP of 1000 denomination shall be Rs. 2000 (proportionately for other denominations.)
KVP Post Maturity Interest
Where on maturity, the amount has become due not but not paid, it shall ‘carry interest from the date of maturity up to the date of repayment at the prevailing POSB A/c rate.
- The KVPs are encashable on maturity at the post office at which they were registered or at any other post office in India after the officer-in-charge verifies (from the office of registration) the entitlement of the person presenting the KVPs for encashment.
- The person entitled to receive the maturity amount shall discharge the KVP on its back in token of having received the payment.
- In case of KVP purchased on behalf of a minor who has since attained majority at the time of encashment, the KVP shall be discharged by such. the person himself and his signature attested either by the person who is known to the Post Master or Bank Officer.
Premature Encashment of KVP
- Premature encashment (before 2 years) is allowed under specific circumstances only, such as the death of the holder(s), or forfeiture by a pledgee being a Gazetted Govt. An officer or under Court’s order.
- In this case, the face value of the KVP with simple interest at the prevailing POSB rate for the complete months only shall be payable.
In case of premature encashment after 2 in half years, the amount payable on a KVP of Rs.1000 denomination, shall be as follows:
|Completed Period||KVP Issued from 12-12-2019 to 31-03-2020||KVP Issued w.ef. 1-4-2020|
Transferability of Kisan Vikas Patras
- A Kisan Vikas Patra is Allowed after one year from the date of purchase, by “applying to the Post Master/Bank Officer and getting the transfer registered.
- Transfer within one year is permitted under specific circumstances only, namely, transfer to an heir or nominee of a deceased holder, under court’s order, on pledging, or to the survivor in the event of death of a joint holder. On transfer, the original certificate shall be discharged and a new certificate shall be issued in the name of the transferee, KVPs held by or on behalf of a minor shall not be transferable if the “nor is alive.
- Transfer of KVPs issued in electronic mode or passbook mode shall be allowed after due diligence and changes in an electronic database, and cancellation of the passbook already issued and reissue of passbook in the name of the transferee.
- KVPs may be pledged as security to a Government/RBI/ Bank/ Corporation or Government Company/local authority/ notifies housing finance company.
- W.e.f. 1.7.2016, KVP on passbook mode shall be eligible for pledging throughout the country. On verification of data in the passbook, the amount of pledge shall be locked, and released similarly after verification. once pledged, the KVPs shall not be transferable till the security is released.
Tax Treatment of KVP3
- A KVP’s interest income is taxable under income from other sources. PPF accounts and National Savings Certificates earn tax-free interest.
- The interest will be taxable on an accrual basis.
- The Tax Deducted at Source (TDS) is not applicable to the amounts withdrawn for post maturity. However, the KVP scheme does not qualify for deduction under section 80C.