Kisan Vikas Patra : KVP Interest Rate, Eligibility, Features, Returns
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KVP (Kisan Vikas Patra) - Eligibility, Features & Interest Rates

Insurance Basics & Financial Advice Kisan Vikas Patra (KVP) is a small savings scheme offered by India Post. It guarantees returns and doubles your investment in approximately 9.5 years (115 months).
KVP appeals to risk-averse investors seeking guaranteed returns and a simple investment avenue. It's ideal for long-term goals and offers stability with a fixed interest rate.

KVP (Kisan Vikas Patra) - Eligibility, Features & Interest Rates

8 Minute |

KVP

Kisan Vikas Patra (KVP) 2023: Eligibility, Features, Interest Rates & Returns

Kisan Vikas Patra (KVP) is a small savings scheme offered by India Post. It guarantees returns and doubles your investment in approximately 9.5 years (115 months).
KVP appeals to risk-averse investors seeking guaranteed returns and a simple investment avenue. It's ideal for long-term goals and offers stability with a fixed interest rate. Many consider KVP if you prioritise safety over high returns and tax benefits aren't a major concern.
Kisan Vikas Patra (KVP) is open to all Indian residents (18+) for long-term savings. It offers guaranteed returns. Choose from single or joint certificates with fixed interest rates and secure your future.
Kisan Vikas Patra interest rate in 2023 was 7.5% p.a. compounded annually. KVP is attractive as it offers low-risk, easy investment options and benefits like loans and nominations. Let’s get into the details.

What is Kisan Vikas Patra?

Kisan Vikas Patra (KVP) is a certificate scheme launched in 1988 to promote small savings. It's open to all Indian residents, not just farmers. Invest a minimum of Rs. 1,000 with no upper limit and get maturity returns that double your investment.
Simply put, just imagine a piggy bank that can double your money in a few years. Kisan Vikas Patra is like that piggy bank for grown-ups. It helps them save without worry for various long-term financial goals.

Types of KVP

There are three types of KVP certificates:

  • Single holder: Issued to one adult or a minor.
  • Joint A type: Issued to two adults, payable to both or survivor.
  • Joint B type: Issued to two adults, payable to either or survivor.
 

Single holder type

This certificate is issued in the name of one adult or a minor (by a guardian). It's suitable for individual long-term savings goals, but it might not be ideal for situations where you might need access to the money sooner.

Joint A type

This certificate is jointly owned by two adults. The maturity amount is payable to both account holders or the surviving account holder if one passes away. It's ideal for joint financial planning or including someone in the investment benefits. However, if you need the money and your joint holder doesn't, you can't access it without their involvement.

Joint B type

Similar to Joint A, this certificate is jointly owned by two adults. However, the maturity amount can be paid to either the account holder or the survivor. This offers flexibility in case one account holder needs the funds earlier. Here, one holder can take the money, leaving the other without access to the funds they would have planned to use for a specific goal.

Eligibility Criteria for The Kisan Vikas Patra Scheme?

If you want to invest in KVP, you will need to meet the Kisan Vikas Patra eligibility criteria:

  • An Indian citizen above 18 years old
  • An Indian citizen who is a minor can be included through a legal guardian
 

Hindu Undivided Family (HUF) and Non-Resident Indians (NRIs) are not eligible to invest.

Who should invest in the KVP scheme?

KVP is suitable for risk-averse investors seeking guaranteed returns. It's ideal for long-term savings goals like retirement planning or children's education. However, if tax benefits are a priority, explore options like PPF or ELSS.
KVP can be a good option for young investors to start saving for a long-term goal far in the future, like retirement planning. However, it might not be the best choice for short-term or emergency savings. Consider exploring other investment options alongside KVP to create a well-rounded portfolio that balances risk and return potential based on your specific goals and risk tolerance.

Kisan Vikas Patra Online

While online applications aren't directly available, you can download the application form (Form A) from the India Post website. Submit the completed form with KYC documents to your nearest post office or designated bank.

Documents Required for Kisan Vikas Patra

The following documents are necessary:

  • application form (Form A)
  • KYC documents such as ID proof (PAN, Aadhaar, etc.) and address proof
 

Kisan Vikas Patra Interest Rate

The current Kisan Vikas Patra interest rate (as of April 1, 2023) is 7.5% p.a. compounded annually. This means the interest earned is added to the principal amount each year, leading to higher returns at maturity.

The Benefits of the KVP Scheme

Before we learn about Kisan Vikas Patra scheme benefits, here is something important to know. Think of KVP as a good fit for your savings plan if safety is your top concern. Unlike some investments, KVP offers guaranteed returns, so your money is safe and will grow steadily over time. However, it's ideal for long-term goals far in the future, like retirement, because you can't access the money for a while (around 9.5 years). Make sure you have a separate emergency fund set aside for unexpected needs, as KVP isn't for quick access to cash.
On the other hand, KVP might not be the best choice if you're young and just starting to invest. While KVP offers guaranteed returns, other options might grow your money faster over a longer investment horizon. Additionally, KVP doesn't offer tax benefits like some other investments. Finally, if you might need the money sooner than 9.5 years, the lock-in period might not be ideal. Now, let's proceed to understand in detail some of the benefits of the very popular Kisan Vikas Patra Scheme.

Long-Term Savings

The 115-month lock-in period encourages long-term financial discipline. The guaranteed returns and potential doubling of investment make it suitable for future goals.

Fixed Rate of Interest

Unlike market-linked investments, KVP offers a fixed interest rate throughout the tenure. This provides stability and predictability for your savings.

Collateral for Loan

You can use your KVP certificate as security to avail loans from banks or financial institutions. This provides liquidity access in case of emergencies.
However, some caution is advised if you are considering KVP as a loan avenue. While you have access to funds, the KVP certificate continues to earn interest. Using it as collateral means you might miss out on some potential interest income during the loan term. Also, if you fail to repay the loan, the lender could seize your KVP certificate. This could result in losing your original Kisan Vikas Patra investment and the potential future returns.

Non-Transferable

KVP discourages impulsive decisions, as these certificates are generally non-transferable (except under specific conditions). This helps maintain your investment plan.

Benefits

While the investment amount itself isn't tax-deductible under section 80C of the Income Tax Act, the interest earned on KVP is taxable as "income from other sources" each year. This means you'll need to pay taxes on the interest income you receive annually.
Remember that KVP tax implications are relatively simple. Unlike some investments with complex tax calculations, KVP interest is taxed as a single income source, making it easier to manage during tax filing. However, note that income tax brackets can influence impact. The tax you pay on KVP interest depends on your income tax bracket. If you fall into a lower tax bracket, the tax liability will be minimal.

Physical Instruments of Investment

KVP investments are represented by physical certificates issued in denominations of Rs. 1,000, Rs. 5,000, Rs. 10,000, and Rs. 50,000. You'll receive the certificate upon successful investment, ensuring a tangible record of your investment.

Frequently Asked Questions (FAQs)

By now, you must have understood quite a bit about the KVP scheme. Here are some frequently asked questions:

Can I transfer a KVP certificate to another person?

In most cases, no. Transfers are only allowed under special circumstances with approval from the post office.

In how many months will the KVP be doubled?

The investment doubles in approximately 115 months, which means 9 years and 5 months.

Is Kisan Vikas Patra interest taxable?

Yes, the interest earned on KVP is taxable each year as "income from other sources."

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