What is Kisan Vikas Patra? Everything you need to know!

What is Kisan Vikas Patra?

Kisan Vikas Patra (KVP) is a savings scheme offered by the Government of India that was initially introduced to encourage long-term savings among Indian citizens, especially in rural areas. KVP is primarily targeted at farmers, hence the name "Kisan," which means "farmer" in Hindi. This scheme provides a safe and secure way to invest money for a fixed tenure and earn guaranteed returns.

Here is everything you need to know about Kisan Vikas Patra:

Eligibility: KVP is open to all Indian citizens, including minors, individuals, joint holders, and trusts. It is not exclusive to farmers, despite its name.

Denominations: Kisan Vikas Patras are available in various denominations, making it accessible to people with different savings capacities.

Investment Period: KVP has a fixed lock-in period, which used to be 2.5 years in the past. However, the lock-in period may vary based on the rules in force at the time of purchase. The scheme's tenure has changed over the years, so it's essential to check the current rules.

Interest Rate: KVP offers a fixed interest rate determined by the government. The interest rate may be reviewed and adjusted periodically. The interest is compounded annually.

Certificate: Investors receive a physical certificate when they purchase KVP. This certificate includes details such as the investor's name, the amount invested, the maturity date, and the interest rate.

Nomination: Investors can nominate another person to receive the proceeds of the KVP in case of the investor's demise.

Transferability: KVP certificates can be transferred from one person to another, making it a flexible savings option.

Premature Withdrawal: While KVP has a fixed lock-in period, it can be prematurely uncashed under certain circumstances, although penalties or restrictions may apply.

Tax Implications: The interest income earned on KVP is subject to taxation as per the prevailing income tax laws. It is important to declare the interest income in your income tax return.

Security: KVP is considered a safe and low-risk investment because it is backed by the Government of India.

Availability: Kisan Vikas Patras are available through post offices and some authorized banks and financial institutions.

Documentation:  To invest in KVP, you need to provide Know Your Customer (KYC) documents, such as identity proof, address proof, and photographs.

Maturity: Upon maturity, the investor can encash the KVP certificate and receive the principal amount along with the accrued interest.

Interest Calculation: Interest is calculated on the initial investment amount and is added to the principal each year, leading to compounded returns.

Please note that the terms and features of Kisan Vikas Patra may change over time based on government policies and regulations. Therefore, it's advisable to check with your local post office or a financial institution for the most up-to-date information and to understand the specific terms that apply when you decide to invest in KVP.