Kisan Vikas Patra Scheme

Kisan Vikas Patra Scheme: Kisan Vikas Patra Scheme (KVP) was launched in 1988, to assist poor, vulnerable, rural, and tribal families that lacked access to mainstream banking and financial systems. Farmers are referred to as Kisan in Hindi, whereas development is referred to as Vikas and certificates as Patra. The fact is that it was designed to assist farmers in saving money for the future. No distinction is made between participants from urban and rural regions under the scheme. It was successful in the beginning, but in 2011 it was abandoned as it may be used for money laundering. To address public demand and to resurrect little savings, the Finance Minister declared in 2014–15 that Kisan Vikas Patra (KVP) will be reinstated. This was reintroduced on November 18, 2014, with effect.

In this article, you will read about the Kisan Vikas Patra Scheme, its features, types, eligibility, maturity period, benefits, etc.

What is Kisan Vikas Patra Scheme?

Kisan Vikas Patra (KVP) is a savings scheme in India that is primarily targeted at farmers. It is a small savings instrument offered by the Indian government. Some Characteristics are:

1. Purpose: Kisan Vikas Patra is designed to encourage long-term savings among farmers and provide them with a safe and secure investment option.
2. Investment Period: The scheme has a fixed maturity period, and the investment doubles in a predetermined number of years. The exact doubling period may vary, and investors are made aware of it at the time of investment.
3. Interest Rate: Kisan Vikas Patra offers a fixed interest rate that is compounded annually. The interest rate is set by the government and may be subject to changes.
4. Denominations: KVP is available in different denominations, allowing investors to choose the amount that suits their financial capacity.
5. Tax Implications: While Kisan Vikas Patra does not offer any tax benefits, the interest earned is taxable. Investors need to include the interest income in their taxable income for the relevant financial year.

Features of the Kisan Vikas Patra Scheme

KVP are offered in denominations of 1000, 5,000, 10,000, and 50,000 rupees, and investments in KVP are not subject to a maximum amount. The Kisan Vikas Patra matures after 124 months, or 10 years and 4 months. and in 124 months, the investment is doubled. Here are the features of the Kisan Vikas Patra Scheme (KVP):

• If Person XYZ invests Rs.20,000, the sum will rise to Rs.40,000 after 124 months. The investment time frame is flexible.
• KVP certificates may be transferred from one individual to another with the initial approval of a bank or post office staff.
• When KVP is acquired on behalf of minors, such a certificate cannot be transferred to another person while the minor is still alive.
• Under the legal guidelines of the Government Savings Certificates Act of 1959, it was introduced as a small savings certificate program.
• The bank or post office where it was issued will cash the certificate. It can also be cashed at a different bank or post office.
• KVP can be purchased by any Indian resident, Trusts, and Minors (those under the age of 18) and the program has no maximum age requirement.
• Non-resident Indians (NRIs) and Hindu Undivided Families (HUFs) are ineligible for the Kisan Vikas Patra.

Kisan Vikas Patra Rate of Interest

The current interest rate for Kisan Vikas Patra (KVP) is 7.5% per annum. This interest rate is applicable for the financial year 2023-24. The interest is compounded annually, so the investor will earn a total return of 7.5% + 7.5% = 15% over the course of the investment.

KVP is a non-banking savings scheme that is issued by the Government of India. It is a fixed-rate scheme that doubles the investment in 10 years. For example, an investment of ₹10,000 in KVP will mature to ₹20,000 in 10 years. To invest in KVP, an investor must make a minimum investment of ₹100. The maximum investment limit is ₹10 lakh. KVP can be purchased for a period of 10 years and, upon maturity, the investor will receive the principal amount and the accrued interest. KVP is a safe and stable investment. It is a good option for investors who want to keep their money safe and earn good returns over the long term.

Types of Kisan Vikas Patra

The following types of Kisan Vikas Patra are:

• Single Holder Type Certificate: This kind of KVP is given to an adult acting on their behalf or behalf of a juvenile. 
• Joint A Type Certificate: This type of KVP is payable to both the owners and the survivor and is provided to two individuals jointly.
• Joint B Type Certificate: This type of KVP is payable to either one of the owners or the survivor and is issued jointly to two people.

Eligibility of the Kisan Vikas Patra Scheme

The following requirements should be fulfilled by potential investors in the Kisan Vikas Patra Scheme as it is considered a secure shelter for savings in India.

• Investments are open to any adult Indian citizen.
• A grownup can make investments on a minor’s behalf as well.
• KVP can be invested jointly by two people.
• A Trust may also make investments.
• There is a nomination facility.

Not allowed: Organizations including businesses, institutions, NRIs, and Hindu Undivided Families (HUF) are not permitted to invest in KVP.

Maturity Period of Kisan Vikas Patra Scheme

• The maturity period of Kisan Vikas Patra Scheme is 10 years and 4 months (124 months). After it, KVP can be withdrawn in full.
• A Pre-mature encashment is allowed after two and a half years (30 months).
• The KVP certificate cannot be prematurely encashed. The certificates can only be cashed in the event of the certificate holder’s demise, forfeiture due to a pledge, or according to a court judgement.
• Investors who invest in KVP will not receive any income tax advantages.

Benefits of Kisan Vikas Patra Scheme

The following are the benefits of Kisan Vikas Patra Scheme:

• Given that Kisan Vikas Patra Scheme is a government initiative and investors get promised returns.
• The programme offers variable denominations ranging from 100 rupees to a maximum of 50,000 rupees.
• KVP offers the same interest rate throughout the year and is a risk-free investment.
• The investment amount is not capped under the scheme.
• With a 2-year and 6-month lock-in period, KVP permits early withdrawal.
• Transfers of the Kisan Vikas Patra are permitted to any other eligible person. Before utilising the benefits, the new holder must complete the necessary paperwork and obtain post office permission.
• For the first quarter of FY 2019–20, the plan is currently offering an interest rate of 7.7%.
• For funds are taken out of KVP after the maturity date has passed, there is no TDS.

Conclusion – Kisan Vikas Patra Scheme

Kisan Vikas Patra Scheme, also known as KVP, is a popular small-savings programme that is available in banks and Indian Post Offices in the form of certificates. It is a constructive programme that will aid in the financial inclusion of society’s most vulnerable and underprivileged groups. This programme aids in forming a long-term saving and investing habits among the nation’s population. To maintain the programme appealing, the government should keep the interest rate less volatile.

FAQs on Kisan Vikas Patra Scheme

1. What is Kisan Vikas Patra Scheme?

Kisan Vikas Patra Scheme (KVP) was launched in 1988 and later in 2014-15 to assist poor, defenceless, rural, and tribal families that lacked access to mainstream banking and financial systems. The fact that it was designed to assist farmers in saving for the future gives Kisan Vikas Patra its name. No distinction is made between participants from urban and rural regions under the Scheme.

2. Write Basic Features of Kisan Vikas Patra Scheme?

KVP are offered in denominations of 1000, 5,000, 10,000, and 50,000 rupees and investments in KVP are not subject to a maximum amount. The Kisan Vikas Patra Scheme matures after 124 months, or 10 years and 4 months. In 124 months, the investment is doubled. In the event that Person XYZ invests Rs.20,000, the sum will rise to Rs.40,000 after 124 months. The investment time frame is flexible.

3. Mention the Different Types of Kisan Vikas Patra.

The following types of Kisan Vikas Patra are

• Single Holder Type Certificate: This kind of KVP is given to an adult acting on their own behalf or on behalf of a juvenile. 
• Joint A Type Certificate: This type of KVP is payable to both the owners and the survivor and is provided to two individuals jointly.
• Joint B Type Certificate: This type of KVP is payable to either one of the owners or the survivor and is issued jointly to two people.

4. What is the Meaning of Kisan Vikas Patra Scheme?

Farmers are referred to as Kisan in Hindi, whereas development is referred to as Vikas and certificates as Patra. The fact that it was designed to assist farmers in saving for the future gives Kisan Vikas Patra its name.

5. What are the Benefits of the Kisan Vikas Patra Scheme?

The following are the benefits of Kisan Vikas Patra Scheme:

• Given that Kisan Vikas Patra Scheme is a government initiative and investors get promised returns.
• The programme offers variable denominations ranging from 100 rupees to a maximum of 50,000 rupees.
• KVP offers the same interest rate throughout the year and is a risk-free investment.