KVP stands for Kisan Vikas Patra.

KVP is a savings scheme certificate that you can purchase from a Bank or Post Office.

In this scheme, the deposit amount gets doubled in 10 years and 4 months.

This scheme was discontinued back in 2011. But it was re-launched in November, 2014. 

How Does KVP Work?

·         Deposit a lump sum amount and purchase KVP certificate

·         The deposit amount will get doubled in 10 years and 4 months

·         At the end of 10 years and 4 months, submit the certificate and get the maturity amount (doubled amount) 

·         Backed by Government of India

·         Safe investment option

·         Guaranteed returns

·         KVP certificate can be pledged as a security to get loan from Banks 

·         An adult for himself

·         An adult on behalf of a minor or a person of unsound mind of whom he is the guardian

·         A minor who has reached the age of 10 years

·         Joint account by up to 3 adults

·         Post Office

·         Nationalized Banks

·         Few commercialized Banks 

·         e-mode (Online Mode)

·         Passbook mode

Features

Income Tax Benefits

Income tax benefits will be same on both old and new tax systems.

No income tax benefits.

Deposit amount is not eligible for tax deduction under Section 80C of Income Tax Act.

Interest received upon maturity is taxable. You need to declare the interest income under "Income from Other Sources" during tax returns and pay the income tax as per your income tax slab.

No TDS (Tax Deducted from Source) during maturity from Post Office or Bank in this Scheme. 

Who Can Open the Account?

Only Indian residents can purchase KVP certificates.

KVP certificate can be purchased by

You can purchase any number of KVP certificates. 

Where Do You Open the Account?

You can buy KVP certificate from

How Do You Open the Account?

KVP certificate can be purchased by cash or cheque.

In case of cheque, the date of realization of cheque in the account will be the date of account opening.

You need not have a Savings Bank (SB) account to buy this certificate.

But you need to have a Savings Bank (SB) Account to receive the maturity amount. 

Deposit Limits

Minimum Deposit amount is Rs. 1,000.

No maximum limit on the deposit amount.

Deposit amount should be in multiples of Rs. 100. For example, Rs. 1,100, Rs. 1,200, Rs. 1,300, Rs. 1,400 and so on. 

Maturity Period

Currently, the maturity period is 10 years and 4 months.

The maturity period is not fixed, and it changes from time to time based on the announcement from the Government. 

Interest Rate (%)

Current annual interest rate is 6.90%.

Interest rate (on the day of account opening) will remain the same throughout the tenure of KVP. It will not change even if there are changes to the interest rate thereafter.

From 01-Apr-2016 onwards, the interest rate of this scheme has been announced on a quarterly basis. Note that this used to be on a yearly basis earlier. 

Compounding Frequency

This scheme follows yearly compounding frequency from 01-Apr-2016 onwards.

Note that it used to be on half-yearly compounding frequency earlier. 

KVP In Online or Passbook Mode

Before 01-July-2016, when you invest in KVP, you used to get physical certificate.

From 01-July-2016 onwards, the Government has decided to discontinue the physical certificates. Instead, you will be given the option to keep KVP in the following formats.

The details are given below. 

e-mode (Online):

After purchasing KVP, you can view the details of your purchase through Online.

For this facility, you have to have a Savings Bank (SB) Account and Internet Banking facility.

Note that you can only view the certificates that you purchased. It means that you can't purchase certificates through online Banking. You still need to go to Bank or Post Office for the purchase or investment. 

Passbook Mode:

This is like the passbook of the Savings Bank (SB) account.

After purchasing KVP, the entries will be made (either printed or manually) in the passbook. 

Your Options:

You can choose either Online or Passbook mode or both. The choice is yours.

If you opt for Passbook initially and later you want to switch to Online mode, it is possible. In that case, you must surrender your Passbook. 

Loss Of Certificate

If you lose or lost the certificates that you purchased before 01-July-2016, then you can apply for the duplicate certificate.

But, instead of a certificate, you will get Passbook and it will have the certificate number of the old lost certificate.

If you lose the KVP Passbook that you purchased after 01-July-2016, then you can apply for and get duplicate Passbook by paying required fees. 

Pre-Mature Closure

KVP certificate can be closed pre-maturely after two and a half years (2.5 years or 30 months) from the date of issue.

Earlier, you had to surrender the physical certificate to close your KVP pre-maturely.

For the KVP purchased after 01-July-2016, you have to surrender the KVP Passbook to close your KVP pre-maturely.

The concerned Bank or Post Office will collect the Passbook and make an entry for delivering the final amount to you.

If you had opted for Online mode for viewing KVP purchases, your online access will be removed. 

Loan Facility

You can use KVP certificate as a collateral security to get Loan from the Banks.

Earlier, you had to submit or pledge the certificate in the Bank to get the Loan.

But, for the KVP purchased after 01-July-2016, you can submit in Passbook mode only. The online mode will not help in this case. 

Account Transfer

KVP certificate can be transferred from one person to another person. It can be done as many times as possible.

KVP certificate can be transferred from Post Office to Bank and vice versa.

Earlier, the physical certificate of the old owner used to be given to the new owner during the transfer process.

But, to transfer the KVP purchased after 01-July-2016, the new owner will receive the mode that the old owner had opted for.

For example, if the old owner had online access, then his access will be removed and new owner will get online access to the KVP.

If the old owner had Passbook mode, then old owner should submit the Passbook. The concerned Bank or Post Office will strike out the entries belonged to the old owner and issue the same Passbook to the new owner in his name. 

Nomination Facility

Nomination facility is available.

You can nominate either at the time of buying the certificate or after buying the certificate (but before maturity). 

NRI And HUF

NRI (Non-Resident Indians) and HUF (Hindu Undivided Family) cannot purchase KVP certificate.