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The Kisan Vikas Patra (KVP) scheme is a government-backed savings certificate initiative designed to encourage long-term financial planning among Indian citizens. With its guaranteed returns and low-risk profile, KVP serves as an attractive option for individuals seeking to grow their savings securely over time.
KVP is a savings certificate scheme introduced by the Government of India, aiming to promote long-term savings among the public. The primary objective is to provide individuals with a secure investment avenue that offers guaranteed returns, thereby encouraging the habit of saving. The scheme is administered by the Ministry of Finance and is available through India Post offices and select public sector banks, ensuring widespread accessibility across the country.
Designed with simplicity and financial discipline in mind, the Kisan Vikas Patra scheme is particularly suitable for conservative investors who prefer assured returns over market-linked instruments. It serves as an ideal savings option for individuals in semi-urban and rural areas who may not have easy access to sophisticated investment products. By eliminating the need for active portfolio management and offering flexible investment limits, KVP empowers citizens to build wealth steadily and safely over time.
Here are further details of the KVP scheme, including interest rate, tenure, and investment possibilities:
As of April to June 2025, KVP offers an interest rate of 7.5% per annum, compounded annually. This rate has remained unchanged since the first quarter of 2024, reflecting the scheme's stability.
The investment matures in 115 months (9 years and 7 months), at which point the invested amount doubles.
Minimum Investment: ₹1,000
Maximum Investment: No upper limit
For investments of ₹50,000 or more, providing a Permanent Account Number (PAN) is mandatory to comply with Know Your Customer (KYC) norms.
The Kisan Vikas Patra scheme is open to a broad category of resident Indian investors. Below are the eligible applicant types and those who are excluded from the scheme:
Indian residents aged 18 years and above
Joint accounts (Type A: payable to both holders; Type B: payable to either holder)
Minors through guardians
Trusts
Non-Resident Indians (NRIs)
Hindu Undivided Families (HUFs)
Cooperative societies
While KVP offers guaranteed returns, investors should be aware of its tax implications. The scheme’s interest earnings are taxable, and it does not offer Section 80C benefits:
Section 80C: Investments in KVP do not qualify for tax deductions under Section 80C of the Income Tax Act.
Interest Taxation: The interest earned on KVP is fully taxable under the "Income from Other Sources" category and must be declared in the investor's annual income tax return.
TDS Exemption: No Tax Deducted at Source (TDS) is applicable on the maturity proceeds of KVP.
KVP has a lock-in period of 2.5 years (30 months), during which premature withdrawal is not permitted.
Death of the certificate holder
Court order or forfeiture by a pledgee
Kisan Vikas Patra has a lock-in period of 2 years and 6 months (30 months), during which premature encashment is generally not allowed except in specific cases such as the death of the certificate holder or a court order. After this lock-in period, premature withdrawal is permitted only under these exceptional circumstances. The payout on premature withdrawal is calculated based on the amount invested plus interest accrued up to the date of withdrawal, without any penalty.
Beyond guaranteed returns, KVP offers several investor-friendly features. These include loan eligibility, nomination facilities, and provisions for certificate transfer under specific conditions:
KVP certificates can be used as collateral to secure loans from banks and financial institutions, providing liquidity without breaking the investment.
Investors can nominate individuals, including minors, by submitting Form C at the time of investment or any time before maturity.
KVP certificates are transferable from one person to another under specific conditions, such as the death of the holder or based on court mandates.
The Kisan Vikas Patra scheme stands out as a reliable and secure investment option for individuals seeking to grow their savings over the long term. With its guaranteed returns, low-risk profile, and flexible investment options, KVP caters to a broad spectrum of investors. However, potential investors should consider factors such as liquidity needs and tax implications before investing. As with any financial decision, it's advisable to assess personal financial goals and consult with a financial advisor if necessary.
If you have lost the original KVP certificate, you can take a duplicate one by applying it to the post office. After registration, some background checks are done, and the post office will consult a bank. Upon confirmation, the duplicate certificate is issued.
No. For cooperative societies and cooperative banks, it is not legal to invest in Kisan Vikas Patra (KVP).
No. NRIs and HUFs are not allowed to invest in the Kisan Vikas Patra (KVP) scheme.
Yes. The interest earned for the KVP scheme is applicable for a tax deduction as per the Income Tax regulations. 'Income from Other sources' includes it on an annual basis.
This scheme is available for all Indian citizens who are not minors and aged above 18 years. This scheme is mainly for people from a rural background who do not have a bank account, but have a nearby post office must apply to it.
The KVP scheme does not offer any tax deductions under Section 80C on the invested amount. However, the interest earned on KVP is fully taxable as “Income from Other Sources” and must be declared annually. There is no TDS deduction on the interest or maturity proceeds; the investor is responsible for paying tax on the accrued interest as per their income tax slab.
Upon maturity, if the KVP amount is not encashed by the investor, savings interest will start applying to the entire payable amount.
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