This article is an introduction to Kisan Vikas Patra (KVP), and describes its features.
Kisan Vikas Patra (KVP) is a fixed interest, long term instrument for investment. KVPs are issued by Government of India (the Department of Post). Since they are backed by the Government of India, KVPs are a virtually risk free avenue for investment. They can be bought from authorized post offices.
KVP has a maturity of 8 years and 7 months. It offers a rate of return of 8.25% per annum. The maturity and rate of interest are aligned in such a way, that an investment in KVP doubles at maturity. Thus, Rs. 100 invested in a KVP becomes Rs. 200 in 8 years and 7 months.
There is no preferential tax treatment for KVPs. This means that it does not qualify for investment under Section 80C of the Income Tax Act (IT Act).
(Want to know about saving income tax? Please read “Saving Income Tax – Understanding Section 80C Deductions“)
A KVP is issued in the denominations of Rs. 100, Rs.500, Rs.1000, Rs.10,000 and Rs.50,000. The minimum investment needed is Rs. 100. There is no upper limit on investment.
Features of KVPs
- Fixed interest, long term, virtually risk free avenue for investment
- Available at authorized post offices
- Maturity: 8 years and 7 months
- Rate of return: 8.25% per annum
- Not eligible for benefits under Sec 80C of the Income Tax Act (IT Act)
- Can be pledged as a security for availing a loan
- Denominations: Rs. 100, Rs.500, Rs.1000, Rs.10,000 and Rs.50,000
- Minimum investment: Rs. 100
- Maximum investment: No upper limit
- Certificate encashable prematurely after 2.5 years
- No TDS
- Nomination facility available
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