Kisan Vikas Patra is one of the most famous investment schemes in India. The main reason is the feature of this investment in which the money invested will get doubled at the end of the maturity period. In December, 2019 fully new Kisan Vikas Patra Scheme, 2019 w.e.f. 12th December, 2019 vide notification No. G.S.R. 920(E) has been introduced by the Government which overruled the old Kisan Vikas Patra scheme. Now recently on 05th May, 2020 vide Notification No G.S.R. 283(E), Government has made some amendment in the scheme declared in December, 2019. Because these time to time amendments in Kisan Vikas Patra Scheme, there are various confusion in the mind of readers hence today I am writing this article specially to give detailed clarity regarding Kisan Vikas Patra Scheme, 2019. So let’s get started!

Kisan Vikas Patra Scheme

Key Features of Kisan Vikas Patra, 2019 are as follows:

1. Maturity Period of Kisan Vikas Patra, 2019:

The maturity period of an account opened between 12th December, 2019 to 31st March, 2020 (both days inclusive) shall be nine years and five months. Maturity period of an account opened on or after the 1st day of April, 2020 shall be ten years and four months.

2. Maturity Amount of Kisan Vikas Patra, 2019:

Deposit made in the account shall double on maturity. Amount of maturity may be repaid to the account holder on an application in Form 2 submitted to the Accounts office.

3. Mode of Payment for Kisan Vikas Patra, 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.

Note:

a) 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.

b) 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.

c) Kisan Vikas Patra (KVP) Available to the Investors in the Denomination of Rs. 1000 with no Upper Ceiling on Investment.

4. Eligibility for 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.

Note: 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.

5. 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.

6. 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 closure value of account opened between 12th December 2019 to 31st March 2020 (both days inclusive) with 1000 rupees

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

Table showing premature closure value of account opened on or after the 1st day of April, 2020 with 1000 rupees]

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 1154
Three years but less than three and half years 1188
Three and half years but less than four years 1222
Four years but less than four and half years 1258
Four and half years but less than five years 1294
Five years but less than five and half years 1332
Five and half years but less than six years 1371
Six years but less than six and half years 1411
Six and half years but less than seven  years 1452
Seven years but less than seven and half years 1494
Seven and half years but less than eight years 1537
Eight years but less than eight and half years 1582
Eight and half years but less than nine years 1628
Nine years but less than nine and half years 1675
Nine and half years but less than ten years 1724
Ten years but before Maturity of Certificate 1774
On maturity of certificate 2000

7. KYC Documents required 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.

8. 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.

9. 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.

10. 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.

At the end to conclude this article, I would like to say that 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. 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.

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

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