Guide to investing in Kisan Vikas Patra (KVP)
Recently re-launched Kisan Vikas Patra (KVP) is a saving certificate from Post office and it was very popular in 1990’s among the investors. Finance Minister recently re-launched this saving certificate in the denominations of Rs 1000, Rs 5000, Rs. 10000 and Rs. 50000. Kisan Vikas Patra can be purchased by cash, pay order, demand draft or by cheque. These certificates can be brought by submitting “Form A” or “Form A1” by either directly or through a Post Office Savings Agent.
Who is eligible?
All Indian citizens who are above 18 years can purchase these saving certificates individually or jointly, it can be easily transferred from one person to another also easily transfer from one post office to another anywhere in India. Currently the interest for KVP is 8.7% per annum hence amount invested will get doubled in 8 years and 4 months.
Where to buy?
Currently Kisan Vikas Patra certificates are sold only by post offices and the govt. is also planning to issue these certificates through selected Nationalized banks in India in future.
What are the advantages of Kisan Vikas Patra (KVP)
The main advantages of Kisan Vikas Patra are
- Greater Liquidity: Investor can encash the certificate anytime after lock-in period of 2 years and 6 months.
- Investment Ceiling: One of the main advantage of Kisan Vikas Patra (KVP) is that there is no upper limit on investment hence you can invest any amount.
- Collateral for loans: Kisan Vikas Patra certificate can used as collateral security to avail loans from the banks. These certificates can be easily sold to anyone, other investments like mutual fund, PF etc. cannot be easily transferred.
What is the taxation on Kisan Vikas Patra (KVP)
Currently no tax benefit for Kisan Vikas Patra (KVP). The amount invested cannot be claimed as deduction under 80C and also interest earned from these certificates will be taxed under “Income from other sources”.
It is mostly suited for the small investors who are looking for high safety with moderate interest.
If you have any doubts regarding Kisan Vikas Patra, kindly leave as comments. We would try our level best to address those.