Kisan Vikas Patra is a government-guaranteed Post office scheme, that acts like an assured fixed-income investment option. If you are looking for a scheme that will give you good returns on long-term investments, then Kisan Vikas Patra (KVP) is a good choice. The current interest rate is 7.5 per cent compounded annually.
KVP account can be opened in any post office by a single adult or a joint Account in which up to 3 adults can invest, a guardian on behalf of a minor or on behalf of a person of unsound mind. Also, a minor above 10 years can invest in KVP in his own name.
One can start investing with a minimum investment of Rs 1,000 and in multiples of Rs 100 thereafter with no maximum limit.
The current maturity is 9 years and 7 months and the investment in KVP as per current interest rates will double in 115 months. The maturity tenure is prescribed by the Ministry of Finance from time to time as applicable on the date of deposit. There is a lock in 2 years and 6 months from the date of deposit unless the primary account holder or any joint account holder dies.
So currently if your total lumpsum investment is Rs 1 lakh, you will get Rs 2 lakh at maturity in 115 months. The Kisan Vikas Patra (KVP) does not qualify for tax deductions under Section 80C and the returns from the scheme are entirely taxable. If you withdraw before maturity TDS is also applicable.
Withdrawals made after the scheme completes its tenure, are not subject to tax deducted at source (TDS). Account holders just have to submit a Form-2 application to the accounts office in the post office.
In the case death of depositors, the deposit will be distributed to the nominee or any designated legal heirs. Up to three nominees or legal heirs can be designated and they can choose to keep the account open and receive the deposit amount and interest upon maturity.
Kisan Vikas Patra also gives you the option to get a secured loan on the deposits. "KVP may be pledged or transferred as security, by submitting the prescribed application form at the concerned Post Office supported with an acceptance letter from the pledgee," government guidelines say.
