The Kisan Vikas Patra scheme or KVP was introduced by India Post in the year 1988. The scheme was introduced as a special investment option for the farmers in India. The scheme offers capital protection and encourages long-term financial discipline.
The scheme is a long term investment which doubles the deposit within 118 months (9 years 10 months). The scheme is ideal for rural and urban investors who want to park hard earned money in low-risk and safe investments. To avoid misuse of the scheme, the government has made it mandatory to submit Aadhaar card and Pan card while opening the KVP account.
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Any Indian citizen can invest in the KVP scheme. The scheme is offered by India Post and is a government backed scheme. The scheme is immensely popular in rural and semi-urban areas, where access to the banking system is difficult. People find this scheme appealing due to ease of access and the hassle-free process. The scheme can be availed at any post office. The applicant must submit the duly filled and signed application form, along with KYC documents.
This is a good investment scheme for conservative investors who want to park surplus funds for the long-term. The scheme aims to encourage farmers save and earn good income. The minimum deposit is Rs 1,000 with no upper limit. This makes the scheme accessible to all sections of society. The scheme allows a lump sum investment and returns double the principal amount at maturity.
Shown below are the eligibility criteria of the Kisan Vikas Patra scheme:
The current interest rate offered on KVP scheme is 7.7% a year. The interest rates are subject to periodic changes. The deposits are likely to double in 9 years and 10 months at the current interest rates.
Guaranteed Returns: The returns generated by the scheme are not affected by market volatility. So, you will receive guaranteed returns at maturity. The scheme aims to encourage the farmer community save for a rainy day.
Capital Protection: The KVP scheme is one of the safest investments as the principal amount and interest are not affected by market volatility.
Interest Rate: The current interest rate on KVP scheme is 7.7% a year. The rate of interest on deposits compounds annually, which helps generate higher returns. The rate of interest also differs based on the number of years invested.
Tenure: The tenure of the KVP scheme is 118 months. So, the money deposited gets invested for a period of 9 years 10 months, post which you receive the maturity amount. The maturity proceeds of the KVP scheme continue to receive interest till withdrawal.
Taxation: The scheme does not enjoy tax benefits under Section 80C and the interest income is fully taxed. However, the scheme is exempt from TDS and the maturity amount is paid in full to the beneficiary.
Ease and Affordability: The minimum investment under KVP scheme is Rs 1,000. There is no specified upper limit. Investment in this scheme must be in denominations of Rs 1,000. The scheme can be availed at the nearby post office. The process of opening the KVP account is simple and hassle-free. The applicant must submit the application form along with KYC documents like PAN card and Aadhaar card.
Nomination Facility: The account holder can also appoint a nominee. For this, he must collect the nomination form and provide the details of the nominee. In case of a minor, it is important to mention the date of birth.
Loan Against KVP Certificate: The KVP certificate can be used to avail loans. The KVP certificate can be pledged as security for the loan availed.
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