Kisan Vikas Patra – Concept, Certificates, Interest, Documents, Process & more

Ideally, Kisan Vikas Patra is a savings certificate scheme. The India post launched it back in 1981.

In simple terms, it is a government initiative to encourage small saving habits in the country. The main aim of the scheme is to secure the investor’s future.

No doubt, the scheme is quite popular, but back in 2011, a government felt that it was misused for things like money laundering.

Hence, with a number of changes, the scheme was relaunched in 2014. Some of the changes include mandatory PAN card proof for investments of more than Rs.50,000.

Also, investors need to offer income source proof for investments of more than—10 lakh.

The best part about this scheme is it is readily available. Almost all post offices across the country issue the certificates.

You can invest in the scheme if you are a resident Indian. Additionally, investors can either invest jointly or individually or in the name of a minor.

In 9 years and four months, the scheme claims to double the principal amount. The primary target audience of the scheme is people in semi-urban and rural areas.

The scheme is mainly suitable for investors who are unwilling to take many risks, have a surplus income, and are willing to earn a fixed income.

About Kisan Vikas Patra

As per recent laws, the scheme’s tenure is 124 months (10 years & 4 months).  The tenure is applicable for investors who purchase the scheme in between 1 April 2020 and 30 June 2020.

The minimum investment amount under the scheme is Rs.1000, and there is no maximum limit as such.

Even if you choose to invest in a lump sum amount, you can get double the amount of your principal at the end of the tenure.

Earlier, only farmers could avail of it, but now anyone can invest in the scheme. Being a low-risk investment platform, you can safely park your money for some time.

Above all, if you want to invest in this scheme, it is compulsory to submit the AADHAAR number as an identity proof of the account holder.

Hence, we can say that the main aim of the scheme is to encourage long term financial discipline among people.

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Types of Certificates available under Kisan Vikas Patra

Single Holder Type Certificate: The scheme issues the certificate to an adult for himself or herself or on behalf of a minor. Even a minor can avail of this certificate.

Joint A Type Certificate– It is a type of certificate where the scheme is issued jointly to two adults. It is payable to both the holders together or to the survivor.

Joint B Type certificate– The scheme issues this certificate jointly to two adults. It is available to either of the holders or to the survivor.

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Who should invest under Kisan Vikas Patra Scheme?

Any investor above 18 years of age can invest in Kisan Vikas Patra. One can avail of it in any of the post offices across the country.

It is mainly appealing for people hailing from rural India as the majority of the people in rural areas don’t have a bank account.

Investors can either buy it for themselves or jointly or for a minor. All you need to do is mention the name and date of birth of your child.

Though a HUF or NRI is not eligible to buy it but a trust can surely buy it.

It is a fantastic investment vehicle for investors who are not willing to take the risk. As under this, besides parking their surplus money safely, they can also earn a fixed return.

Basically, it is all about your risk profile and goals. If you are someone who is seeking tax-saving goals, then you can invest in Public Provident Fund, National Saving Certificates, etc.

Lastly, you can choose an investment vehicle as per your goals and strengths.

Who can Invest in this Scheme?

• All residents of India can invest in the scheme.
• The investor’s age must be 18 years.
• NRIs and PIOs are not eligible to invest in the scheme.

Interest rates under Kisan Vikas Patra or KVP

The Finance ministry decides the Kisan Vikas Patra interest rate, and it varies every quarter.

If you invest in one quarter, then the rate is prevalent for the entire tenure. The prevailing rate of return as of now is 7.6%.

Learn everything about Retirement Planning here

Benefits of investing in Kisan Vikas Patra Scheme

Here are the benefits of investing in Kisan Vikas Scheme –

Investment amount flexibility

The post offices offer certificates of different values, including Rs.1,000, Rs.5,000, Rs.10,000, and Rs.50,000.

As there is no maximum limit on investment, you can earn returns at high KYP rates for any amount of money.

Easy to apply

You can easily apply for KVP certificates. Investors can apply for the scheme through any post office or an authorized financial institution.

Additionally, you can apply for the scheme only.

The flexibility of premature withdrawal

After a tenure of 2 years and six months from the time of investment, you can choose premature withdrawal.

Above all, you don’t have to pay any penalty charges.

A fixed-rate of return

As the scheme is an initiative of the government of India, you can avail of a fixed rate of return. It is mainly because the market volatility does not affect the scheme.

One thing is for sure, investors can genuinely enjoy the benefits of fixed returns even if the ministry changes the prevailing rate of interest under the scheme.

Additionally, it is quite possible that the tenure might increase or decrease under such circumstances.

Loan options

You can use the KVP certificate as collateral if you want to avail of loans from financial organizations.

Thanks to the scheme, you can help yourself with secured loans at affordable interest rates, so the lenders have to undertake less risk.

Tax benefits

No doubt, the KVP interest rate offers impressive returns, but the investors are not eligible for any tax benefit under section 80 C.

But interest is also not subjectable to tax deduction at source.

Capital protection

The scheme is one of the safest modes of investment for investors. Investors will earn both the interest and principal at the end of the tenure.

Nomination facility

You get the nomination certificate at the post office. All you need to do is fill up the required information.

Don’t forget to mention the birth date of the nominee if he or she is a minor.

Documents to purchase Kisan Vikas Patra or KVP

KYC documents and address proof documents include an Aadhaar card, voter ID card, passport, driving license, etc.

Passport size photograph.

Application form for KYP. You can either collect it from a post office or download it from a web portal.

Birth certificate.

Application process under Kisan Vikas Patra or KVP

The application process under the scheme is relatively easy. You can check the interest before investing.

• Firstly you need to collect the form from the post office or download it. Then you need to fill it completely.
• Besides filling the form correctly, you also need to gather all the documents that are mandatory.
• After submitting the form and documents, you can complete the process by investing the minimum amount.
• The financial institutions or banks will immediately issue certificates once they receive the form and documents. If they fail to issue the certificate, they will issue a receipt to the investors, and later on, you can exchange it for a certificate. The certificate is mandatory during withdrawal when the scheme matures.

Nomination under Kisan Vikas Patra

By filing a Form C at the time of purchase, single holders or joint holders of a certificate can make a nomination by filling up the details.

When you make a nominee, then he or she will be eligible to avail the benefits of the certificate when the single or joint holder dies.

Even if you don’t make the nomination during the time of purchase, you don’t need to worry as you can do it anytime. But you have to make sure you do it before maturity.

You can submit the nomination certificate to the postmaster or bank officer. Hence, there is no nomination facility available if the minor holds the scheme.

If you have multiple certificates under different dates, then you need to make an additional nomination for all. For the first time, there is no charge for nomination. Additionally, for the subsequent nomination, investors need to pay Rs.20.

Withdrawal process under KVP

Individuals can either withdraw on maturity or before it under the KVP scheme.

Investors are not eligible to get any interest in the scheme if they choose to withdraw the money within one year of the scheme.

Additionally, there is a penalty for a withdrawal within one year. Investors will earn less rate of interest if they choose to withdraw money after one year but before 2.5 years of purchase.

Under this, no additional penalty is applicable. Individuals can encash the certificate if any emergency arises.

Conclusion – Kisan Vikas Patra or KVP

A scheme is a fantastic option for investors not willing to take many risks. It also guarantees a fixed rate of return and is easily accessible.

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