If you looking for a safe investment with moderate returns, then Kisan Vikas Patra is back as an avenue for you. Government relaunched this after a gap of about 4 years with an aim to encourage the saving habits among small investors. Initially the certificates will be sold through post offices, but eventually it will be offered through through designated branches of nationalised banks.
Features of Kisan Vikas Patra
- Denomination of Rs. 1000, 5000, 10,000 and 50,000
- Investment made in the KVP will Double in 100 Months
- No Upper Ceiling on Investment.
- Can be issued in either single or joint names
- Transferable from one person to any other one person or multiple persons any number of times
- May be pledged with banks as security for availing loans
Apart from the above features, it has the unique liquidity feature as such encashment of certificates is possible after the lock-in period of 2 years and 6 months and subsequently in any block of six months on pre-determined maturity value. Although, investments in KVP certificate will double in 100 months but in case of premature withdrawal you have bear some losses on account of lower interest rates.
In a scenario, where the investments are kept for complete 100 month, the calculation suggests the effective returns nearly about 8.41%.
Drawbacks of investing in Kisan Vikas Patra
- KVP is not listed under section 80C of income tax act meant for tax deductions therefore do not offer tax benefits.
- Being a bearer instrument, it allows anyone holding the instrument to claim the money.
- Interest from KVP is taxable and required to be mentioned in IT return under the head income from other sources. As such, Investor need to calculate accrued interest every year for tax calculation.
- Similar to Banks, Post Office is required to deduct TDS where interest income is above Rs.10,000 per year.
- Cash payments are not allowed anymore and the proceed of maturity or withdrawal will be transferred to the holders postal saving account
How to Invest
Kisan Vikas Patra can be purchased from your nearest Post Office by just filling up a form. Also you need your photographs along with cash or cheques or demand drafts for the requisite amount. The certificate specifying your name, amount, date of maturity and amount on the date of maturity, will be issued by the Post Office. You may also transfer your certificate from one post office to another anywhere in India. Nomination facility is also available.
Who Can Invest
If you are a citizen of India and an adult with more than 18 years of age, you are eligible to invest in either your own name or on behalf of a minor. Any trust may also invest in KVP. Also, one or more adults may jointly invest with KVP.
Significance of name
The word “kisan” in name Kisan Vikas Patra does not imply that it is meant for farmers only and only farmers can buy these saving certificates. However, it suggests that the revenue mobilized by this scheme will be used by the Government of India for various welfare schemes for farmers. So, any individual can safely invest and save their money with Kisan Vikas Patra.