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 :-

1. Amount Doubles in 113 Months under 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)

2. Mode of Payment for Purchases under Kisan Vikas Patra Scheme, 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.

3. Issue of Certificates under Kisan Vikas Patra Scheme, 2019

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.

4. Who Can Invest under Kisan Vikas Patra Scheme, 2019

Kisan Vikas Patra can be purchased by:

  • An adult in his own name, or on behalf of a minor or on behalf of a person of unsound mind – The certificates can be purchased by an adult for himself or on behalf of a minor or on behalf of a person of unsound mind
  • KVP can be purchased in Joint Name- It can also be purchased jointly upto three adults payable to all the account holders or upto three adults payable to any of the account holders.

5. Who is not Eligible under Kisan Vikas Patra Scheme, 2019

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.

6. Transfer of account under Kisan Vikas Patra Scheme, 2019

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.

7. Premature closure of account under Kisan Vikas Patra Scheme, 2019

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
(Rupees)
(1) (2)
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

8.Taxation of Kisan Vikas Patra Scheme, 2019

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.

9. KYC Documents under Kisan Vikas Patra Scheme, 2019

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.

10. Where one can buy Kisan Vikas Patra (KVP)

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

11. No upper ceiling limit on investment under Kisan Vikas Patra Scheme, 2019

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.

12. Replacement of lost or destroyed Certificate under Kisan Vikas Patra Scheme, 2019

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.

13. Place of encashment under Kisan Vikas Patra Scheme, 2019

A Certificate shall be encashable at the Post Office or Bank of its Issue:

14. Pledge as Security for Loans under Kisan Vikas Patra Scheme, 2019

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.

15. Liquidity under Kisan Vikas Patra Scheme, 2019

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.

16. Conclusion

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)

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40 Comments

  1. Patil says:

    I want to invest 5lalh now in Oct 2020 so as per current state after 10 yrs 4 months I wil get 10 lakh.. will the benefit of 5lakh be taxed on my ITR as income from other source @30%.. plz confirm on tax part I need to pay..

  2. Jagat Narayan Prajapati says:

    Sir, my father is a senior citizen and he has invested ₹4000000 in Kisan Vikas Patra in 2019.can you tell me how much tax would be deducted upon its maturity after 10 year. No other sources of income after retirement.

  3. Ajith says:

    Sir,
    Good morning
    What is the % of taxes applicable on interest revenue on KVP and what the cut off limit for tax free exemption

  4. Parveen kumar says:

    Sir my father is a senior citizen and he has invested ₹4000000 in Kisan Vikas Patra in 2019.can you tell me how much tax would be deducted upon its maturity after 10 year. No other sources of income after retirement.

  5. shashikala says:

    Hi,

    I want to invest Rs 12 Lakh in KVP. Now my age is 48.After the retirement is tax to be paid for the maturity amount or every year i have to pay the tax for the interest amount.

    1. Jagdeep Sadhale says:

      Income from other sources can be offered to tax either on ‘cash’ or ‘mercantile’ basis. Therefore, contrary to what has been indicated in this article, you should be eligible to offer the interest to tax in the year of maturity.

  6. Prashant Bhangale says:

    Sir,
    Please reply whether maturity amount of Kissan Vikas Patra purchased on my daughter name in 2010 and matured in jan 2019. I would like to know whether to show matured amount as other income for salried person at the time of filing return ? please reply.

  7. Deepjot Sharma says:

    Sir my mother is a senior citizen and she has invested ₹5000000 in Kisan Vikas Patra in 2016.can you tell me how much tax would be deducted upon its maturity after 100 months.

  8. lalit kumar says:

    hi sir,

    my mom had KVP of 35L.she has no other source of income. can we show the this in her interest income and pay tax year on year. so we do not have to pay tax on maturity.

  9. Shanthanu says:

    I hold KVP which is midway through its term. I was under the impression that KVP is taxable on maturity. I have therefore not declared the interest on my IT return over the last few years. Now I see that the interest is taxable on accrual, and tax should have been paid yearly. What do I do now? Please share your opinion.
    Thanks.

  10. Sanjit Sen says:

    If a KVP is of Rupees Twenty thousand only in same registration and it is to close as prematured, then is it possible to encash only any single instrument by cash ?

  11. Rupinder Singh says:

    My father purchased KVP of Rs. 2,10,000/-. After his death we withdrew the KVP . My question is that the interest on this amount is either taxable or not. As it is invested by my father and credited into my account prematurely because of his death. As someone was saying that in case of death interest is not taxable. so please guide us under which rule it is not taxable . If no how can i pay tax on it.

  12. prashant says:

    Hi,

    I have invested Rs 10 Lakh in KVP. I want to know TDS is going to deduct directly from my interest or I have to show that in my income tax return.

    Thanks
    prashant

  13. Rakesh Kumar says:

    Hi,

    I have invested Rs 10 Lakh in KVP. I want to know TDS is going to deduct directly from my interest or I have to show that in my income tax return.

    Thanks
    Rakesh

  14. Abdul says:

    As i am en employee i would like to know as per accounts need to invest 30k in tax savings so is it applicable to invest in KVP to avoid taxes

  15. Ganesh Chikhalikar says:

    Sir,
    The article is very informative. Thank you. I have a query. My father had invested in KVP in 2007 in the joint name with my mother as ‘either or survivor’. He sadly passed away before the maturity of such KVP and now my mother has received the whole amount. Now, I want to know whether the whole amount of interest needs to be declared in my mother’s return or how? the interest has not been declared before. My father passed away in Mar 2015. KVP matured in July 2015.
    Please provide your valuable guidance Sir.
    Thank you.
    Ganesh

  16. karunakaran says:

    if i put 5 lacs, will it be doubled in KVP scheme? And what is the amount i will get after 100 months? Kindly tell the amount which i would get after deductions if any?

  17. deb says:

    Please tell if tax on interest of KVP is deducted yearly or at the time of maturity. can interest calculated each year and tax be paid accordingly-or if the tax has to be paid after it matures.

  18. Maheshwar Shahi says:

    I have kisan vikas patra which is mature I purchased it from UP which is my native place right now I am I telangana I have no time to go there can i redeem it here.

  19. Kanwaljit Singh Dhunna says:

    Dear Kanoi Ji,

    Namaskar !

    I have been visiting yours site since Last 1 Year. I must say the contents are of very quality. Appreciation !

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