Monday, 11 October 2010

All about KVP or Kissan Vikas Patra

Kissan Vikas Patra is one of the post office saving schemes which is available at all post offices in India. Let us go through the details of this investment scheme.

Who can invest in KVP?

KVP can purchase by an adult who is a resident in India. It can also be purchased jointly by two adults. A minor also can purchase this instrument directly or through a guardian. A trust can also purchase KVP. But a Company, Society or any other Institution cannot purchase this post office saving certificate. Non-Resident Indian/HUF are also not eligible to purchase.

Minimum and Maximum amount of Investment

The Minimum amount of investment in KVP is Rs. 100 and it is in the denominations of Rs. 500, Rs. 1000, Rs. 5000, Rs. 10000 and Rs. 50000. The certificate upto Rs.10000 is available from all post offices in India; But for Rs. 50000 is available only from Head Post offices in India.

Rate of Interest and Time of maturity

The Maturity period is 8 years & 7 months. The scheme gives 8.40% compound interest and the amount invested will be doubled in this period (for the KVP purchased on or after 1st March 2003) and the investor will get back the 200% of the investment. Yes the money will be doubled in 8 years & 7 months. Premature encashment is also possible after 2.5 years. Reinvestment facility is also available.

The following Percentage of face value can be received on premature encashment of KVP (for the KVP purchased on or after 1st March 2003)

2 years 6 months or more but less than 3 years                                 17.05%

3 years more but less than 3 years 6 months                                     20.79%

3 years 6 months or more but less than 4 years                                 26.71%

4 years or more but less than 4 years 6 months                                  31.08%

4 years 6 months or more but less than 5 years                                  35.59%

5 years or more but less than 5 years 6 months                                  43.56%

5 years 6 months or more but less than 6 years                                  48.84%

6 years or more but less than 6 years 6 months                                   54.33%

6 years 6 months or more but less than 7 years                                 64.91%

7 years or more but less than 7 years 6 months                                    71.38%

7 years 6 months or more but less than 8 years                                  78.10%

8 years or more but less than 8 years 7 months                                 85.09%

Tax Treatment of KVP

No Income Tax Exemption under section 80 C is available for KVP. Interest accrued on yearly basis will be taken as income for Income Tax purposes, but no TDS will be deductible. A deposit in KVP is exempt from Wealth tax.

Other features of KVP

KVPs are encashable at any Post office before maturity by way of transfer to desired Post office. It is transferable to all post offices in India. The Certificate (KVP) is transferable from one person to another person before maturity. Duplicate certificate can be issued in case of lost, stolen, destroyed, Mutilated or defaced certificate. KVP can be pledged as security against a loan to Banks/Govt. Institutions. Nomination facility is also available. KVP can be purchased or reimbursed through power of attorney also. The Govt. of Maharashtra has declared the KVP as a "Public Security" under the provision of Mumbai Public Trust Act. 1950.

3 comments :

  1. Hola,
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    Edwas

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  2. [...] small savings schemes with interest rates on government securities. It has also suggested that Kisan Vikas Patra (KVP) be withdrawn and the annual investment limit for the popular Public Provident Fund (PPF) be [...]

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  3. [...] had already held parleys with vendors on this front. “We will also issue debit cards to our existing savings account-holders,” the source [...]

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