Kisan Vikas Patra Scheme is one of the national savings schemes launched by the Government of India. The scheme enjoys sovereign guarantee and has been quite popular since inception.
Kisan Vikas Patra is issued as a certificate in denominations of 1000 Rs. 5000 Rs. 10000 Rs. and 50000 Rs.
The current interest in the scheme is 6.9%(annually). Now it will mature in 124 months.
Here in this article, we will talk about the scheme and many of its benefits in the detail.
Also Read: Why You Must Have Senior Citizen’s Savings Scheme ?
What types of certificates are issued?
There are 3 types of certificates: Single holder certificates; Joint ‘A’ type certificates and Joint ‘B’ type certificates.
Single holder certificates: These certificates are issued to; an adult individual, to minors, or to an individual as a representative of a minor.
Joint 'A' type certificates: This type of certificates can be issued jointly to two adults, and payable to both the adults jointly or to the survivor.
Joint 'B' type certificates: This type of certificates can be issued to two adults jointly, and payable to either of the holders jointly or to the survivor.
Where we can buy the Kisan Vikas Patra?
Kisan Vikas Patra or the certificate can be bought at the post office and authorized banks.
How to invest in the Kisan Vikas Patra?
You can purchase the certificate at the post offices or at banks by in-person or through authorized agents of small savings scheme.
Form A should be filled and submitted at the post office or at the bank for purchasing of the certificate. Along with the application, the payment to purchase the certificate should be done by:
Cash or through local cheques, pay order or demand draft.
You can also purchase the certificate by submitting the duly filled withdrawal form along with the passbook from your saving account at the post office or bank.
If the certificate is purchased through the cash payment, the certificate will be issued immediately.
If the certificate is purchased through other payment modes e.g. cheques, pay orders or demand drafts, the date of the issue of the certificate would be the date when the payment from such modes is received.
If the certificate is not issued due to some reasons, a provisional receipt would be given to the purchaser which can be exchanged by the certificate. In such cases, the issue date of the certificate would be the date of the provisional receipt.
What are the documents required to buy the certificates?
Along with the filled application in Form A, the following documents are required at the time of purchasing the certificate:
1. Age proof
2. Identity proof
3. Address proof
So you should approach the office with above documents when you purchase the certificate. The documents accepted for age, identity and address proof are PAN card, passport, voter Id, driving license, ration card, telephone bill, and electricity bill.
Does the investment come under section 80C of income tax?
There is no tax benefit under the section 80C of income tax if you invest in this scheme. Also, the interest earned on your deposit is taxable as per your tax slab. The scheme also does not come under the provisions of tax deducted from source.
Can we transfer the certificate from the post office to a bank?
Yes, the certificate can be transferred from the post office to a bank or from a bank to the post office. For such transfers, the holder or holders must fill, sign and submit the Form B to the post office or bank from where they had bought the certificate.
Can the certificate be transferred from one person to another person?
Yes, the certificate can be transferred from one person to another person if the given conditions are met. For more details on such conditions, you can visit this link.
Can we nominate someone in the certificate?
Yes, the nomination facility is available. You can nominate any person at the time of purchasing the certificate. If you could not nominate anyone during purchasing of the certificate you can still nominate before the maturity of the certificate. Form C must be used for such nominations.
If you want to change the nomination, you can use form D to delete the nominee and re-nominate anyone.
If a certificate is purchased for a minor or on behalf of a minor, no nomination can be made for such certificate.
There is no fee for the first time nomination. However, 20 rupees will be charged subsequently for every nomination or cancellation.
What is the maturity period of the certificate?
The certificate matures after 112 months (9 years and 4 months) from the date of the certificate. So, your 1000 rupees denomination certificate yields value of 2000 rupees after 112 months.
Can we take a loan on the KVP certificate?
Yes, you are eligible for a loan against your certificates. However, the entire outstanding loan has to be paid before the maturity of your KVP certificates.
What is the applicable post-maturity interest rate?
Suppose, you don’t encash your certificate after maturity; your due amount would earn interest for a maximum of two years from the date of maturity to the date of repayment meeting the following conditions:
1. The amount would earn only simple interest as per the applicable rate of interest of post office savings accounts.
2. For the payment of interest, any period which is less than a month will be discounted.
3. The interest earned would be paid to the holder in a lump sum at the time of repayment.
What are the rules for the premature encashment of the certificate?
A certificate can be converted for money after 2 years and 6 months from the date of issue of the certificate.
The certificate can also be encashed if the holder of the certificate has died. In case of joint holders, if any of the certificate holders have died; the certificate can be cashed on.
Please find below; how much you would receive if the certificate is encashed after different holding periods.
What are the minimum and maximum deposit allowed under this scheme?
The certificate is available in the denominations of 1000 rupees, 5000 rupees, 10000 rupees, and 50000 rupees. So, the minimum deposit is 1000 rupees. You can deposit as much as you can under this scheme.
What if I lost my certificate?
The certificate holder may apply for issue of a duplicate certificate to the post office or bank of the issue if the certificate is lost, destroyed, mutilated or stolen.
Should I invest in this scheme?
In my opinion, if you’re young you should completely avoid investing in this scheme.
These debt schemes are not going to add any value in your portfolio in the long run. Instead, you must invest in equity diversified mutual funds which can help you grow your capital with some risk.
If we talk about the risk of investing in equities, it is highly minimized if the period of investment is longer.
Also, the scheme does not help in saving taxes which is a major disadvantage of investing in the KVP certificates.
You can choose this scheme for investment if you are retired and want to see growing your money without risk. Else, simply NO, NO to this scheme.
Have you invested in Kisan Vikas Patra Scheme? What is your feedback? How do you find this scheme in terms of returns? Please share your thoughts we like to hear from you.