Kisan Vikas Patra is a saving certificate which was first launched in 1988. Kisan Vikas Patra was a very Popular Investment Scheme amongst the investor which was discontinued wef 30.11.2011 on recommendation of Shayamla Gopinath committee considering the misuse of the scheme vide government Notification [F.No. 1/10/2011-NS-II], dated 25-11-2011 and decision for the same was taken vide Office memorandum no. No. 6-1/2011-NS.II (Pt.) dated 11.11.2011. Government has reintroduced the scheme on 23rd September, 2014 with some modifications vide Notification No. GSA- 705(E) by announcing Kisan Vikas Patra Rules, 2014. Now Government has again reintroduced the said scheme on 12th December, 2019 with some modifications vide notification No. G.S.R. 920(E) by announcing Kisan Vikas Patra Scheme, 2019.
In this Article we have discussed the Features of this new scheme alongwith taxation of Interest on Kisan Vikas Patra Scheme, 2019 :-
Amount invested in Kisan Vikas Patra (KVP) doubles in 113 months (wef 12.12.2019) at the present rates. Currently rate of Interest on KVP is 7.70%. (wef 12.12.2019)
Purchase of a Certificate may be made to a Post Office or Bank in any of the following modes, namely:—
(i) by cash; or
(ii) by locally executed cheque, pay order or demand draft drawn in favour of the Post Master; or
(iii) by presenting a duly signed withdrawal form or cheque together with the passbook for withdrawal from Savings Account standing in credit of the purchaser at the same Post Office or Bank.
In case of cash payment certificate will be issued immediately while in case of purchase by locally executed cheque, pay order or demand draft the same will be issued on realisation of such locally executed cheque, pay order or demand draft as the case may be.
Kisan Vikas Patra can be purchased by:
Kisan Vikas Patra is not for business entities such as a company or institutions. NRIs or HUF (Hindu Undivided Family) are also not eligible to invest in KVP.
An account may be transferred from one individual to another, in case of death, in case order is passed by court or in case of pledging.
The facility of transfer from one post office to another anywhere in India and of nomination will be available.
The certificate may be prematurely encashed any time after two years and a half from the date of purchase, in the event of death of holder or on order of court of Law or forfeiture by a pledgee.
Table showing premature encashment value of Certificate – Denomination of Rs.1,000/-
|Period from the date of the account to the date of its pre-mature closure||Amount payable
inclusive of interest
|Two and half years but less than three years||1173|
|Three years but less than three and half years||1211|
|Three and half years but less than four years||1251|
|Four years but less than four and half years||1291|
|Four and half years but less than five years||1333|
|Five years but less than five and half years||1377|
|Five and half years but less than six years||1421|
|Six years but less than six and half years||1467|
|Six and half years but less than seven years||1515|
|Seven years but less than seven and half years||1564|
|Seven and half years but less than eight years||1615|
|Eight years but less than eight and half years||1667|
|Eight and half years but less than nine years||1722|
|Nine years but before Maturity of Certificate||1778|
|On maturity of certificate||2000|
|Two and half years but less than three years||1173|
There is no incentive for investment in KVP and Interest on KVP is taxable on accrual basis and will be taxed as Income from Other Sources. deduction under section 80C is not allowed on this investment. TDS is not deductible on Interest on KVP.
Investor will have to undergo Know Your Customer (KYC) modalities at the time of application. Investor should have to submit the following documents for identity: 1) Passport size photo 2) Identity Card any one of the following i.e. Election card, Ration Card, Passport, Driving License, etc. 3) Address Proof any one of the following i.e. Light bill, Telephone bill, Bank passbook etc. Copy of PAN card is necessary if investment is above Rs. 50,000/-.To deposit Rs. 10 lakhs and above, you must submit income proofs (salary slips, bank statement, ITR document etc.). Further, it is also mandatory to submit AADHAR number as proof of identity of account holder. Please note that denominations of Rs. 50,000 are available only at the head post office of a city.
Kisan Vikas Patra (KVP) is available in Post Offices. In future, KVP will be available in banks which are/will be authorized for handling small savings schemes.
Kisan Vikas Patra (KVP) Available to the Investors in the Denomination of Rs. 1000 with no Upper Ceiling on Investment; Investment made in the KVP will Double in 113 Months
The re-launched Kisan Vikas Patra (KVP) will be available to the investors in the denomination of Rs. 1000 with no upper ceiling on investment.
If a Certificate is lost, stolen, destroyed, mutilated, the person entitled thereto may apply for the issue of a duplicate Certificate to the Post Office or Bank of issue with (a) a statement showing particulars, such as number, amount and date of the Certificate and the circumstances of such loss, theft, destruction, mutilation or defacement; and (b) identity slip, if any.
A Certificate shall be encashable at the Post Office or Bank of its Issue:
The certificate can also be pledged as security to avail loans from the banks and in other case where security is required to be deposited.
Kisan Vikas Patras have unique liquidity feature, where an investor can, if he so desires, encash his certificates after the lock-in period of 2 years and 6 months and thereafter in any block of six months on pre-determined maturity value.
Reintroduction of Kisan Vikas Patra (KVP) is a welcome step not only in the direction of providing safe and secure investment avenues to the small investors but will also help in augmenting the savings rate in the country. The scheme will also safeguard small investors from fraudulent schemes. With a maturity period of 9 years 5 months, the collections under the scheme will be available with the Govt. for a fairly long period to be utilized in financing developmental plans of the Centre and State Governments and will also help in enhancing domestic household financial savings in the country.
For those who have no access to banks, investment in KVP may be a worthwhile proposition. Having no tax concessions, the KVP as in investment is for those who do not pay taxes at all or are in the lower tax bracket.
The biggest advantage of KVP is that it is a bearer bond, transferable by endorsement and delivery. This confers unmatched anonymity to the holder of the instrument.
Image 1 courtesy of 1shots at FreeDigitalPhotos.net
(Republished With Amendments)