Taxability of interest accrued on the Kisan Vikas Patras

Kisan Vikas Patras were introduced on 1st April, 1988. The Department of Economic Affairs, Ministry of Finance, in its notifications dated 23-3-1988, 16-12-1991, 24-4-1992 and 2-9-1993 had specified the amount payable on these after 2½ years and up to the date of maturity. However, interest and maturity amount during 2½ years had not been provided in these notifications.

2. As interest on these Patras has to be assessed to income-tax on accrual basis, the amount of interest accrued on these Patras during initial 2½ years has also been determined in consultation with the Department of Economic Affairs. The amount of interest accrued on investment in Kisan Vikas Patras by an assessee is to be calculated on the basis of the following table received from the Department of Economic Affairs wherein rate of interest and maturity amount for Rs. 100 denomination of Kisan Vikas Patras are given :

Period from the date of certificate to the date of its
Encashment
Purchased from 1-4-1988 to

15-12-1991
Purchased from

16-12-1991 to
23-4-1992
Purchased from

24-4-1992 to
1-9-1993
Purchased from

2-9-1993
Rate of interest
Maturity value
Rate of interest
Maturity value
Rate of  Interest
Maturity value
Rate of Interest
Maturity value
(Notification

dated
23-3-1988)
(Notification dated

16-12-1991)
(Notification dated

24-4-1992)
(Notification dated

2-9-1993)
(1) 1 Year
10
1,100
12
1,120
12
1,120
11
1,110
(2) 2 Years
10
1,220
12
1,260
12
1,260
11
1,240
(3) 2 Years &   6 Months
10
1,280
12
1,340
12
1,340
11
1,310
(4) 3 Years
11
1,380
13
1,460
13
1,460
12
1,420
(5) 3 Years &   6 Months
11
1,450
13
1,550
13
1,550
12
1,500
(6) 4 Years
12
1,590
13.5
1,690
13.5
1,690
12.5
1,620
(7) 4 Years &   6 Months
12
1,690
13.5
1,800
13.5
1,800
12.5
1,730
(8) 5 Years
13
1,880
13.75
1,940
2,000
12.75
1,860
(9) 5 Years &   6 Months
2,000
 —
2,100
2,000

Note : Maturity values cited are calculated on half-yearly compounding basis based on the rate of interest cited.

Circular : No. 687, dated 19-8-1994.

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