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In the era of stock market fluctuations, mutual fund risks and falling bank interest rates, every investor wants a safe haven for his hard-earned money where there is 100% legal and government guarantee of returns. If you also want to double your lump sum savings directly without any market risk, then ‘Kisan Vikas Patra’ i.e. KVP scheme of the Indian Post Department is one of the most reliable investment options in the country. Initially started with the aim of motivating farmers for long-term savings, this scheme is today open to every common citizen of the country. Being equipped with the Sovereign Guarantee of the Government of India, the capital deposited in it remains completely safe and the fixed return on maturity comes directly into your hands. Be it Hazratganj GPO of Lucknow or any rural post office branch of the country, you can become a part of this scheme with very easy paper process.
The biggest USP of Kisan Vikas Patra is that at the time of opening the account, you know the fixed date when your money will be doubled. As per the existing rules set by the Ministry of Finance, Government of India, the amount deposited in Kisan Vikas Patra is fine. 115 months (i.e. 9 years and 7 months) It doubles.
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Investment of ₹1 lakh: If you deposit ₹1,00,000 in this scheme, you will get the entire ₹2,00,000 back after completion of 115 months.
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Investment of ₹5 lakh: A lump sum deposit of ₹5,00,000 will directly grow into a corpus of ₹10,00,000 in 9 years and 7 months.
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Investment of ₹10 lakh: If an investor invests ₹10,00,000, he will get a huge guaranteed amount of ₹20,00,000 on maturity.
The most special thing about this scheme is ‘rate lock-in’. The day you buy Kisan Vikas Patra, the interest rate and maturity time decided on that day is locked in for your entire tenure. Even if the government cuts the interest rates of small savings schemes in future, it will not have any negative impact on your already running KVP certificate.
Presently the Central Government is on Kisan Vikas Patra. Annual interest rate of 7.5% (Compounded Annually) Is offering. In this scheme, interest is not paid on monthly or quarterly basis, rather the interest gets added to the principal amount every year and works on the principle of compounding. This amount of interest, compounded continuously, reaches exactly equal to your principal amount at the end of the 115th month, thereby doubling the total corpus. While the normal FD of most of the big commercial banks of the country offers only 6.5% to 7% interest, this 7.5% scheme of the post office provides security of a stable and better return to long term investors.
The investment limit in Kisan Vikas Patra has been made extremely flexible as per the convenience of every class of citizen:
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Minimum Deposit: Only minimum deposit amount to open an account in the scheme ₹1,000 Has been decided.
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Multiples: After ₹1,000, you can invest any amount in multiples of ₹100.
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Maximum Investment: Invested in KVP No Upper Limit not determined. You can deposit a lump sum amount of ₹50 thousand, ₹5 lakh, ₹50 lakh or even more as per your capacity.
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Number of Accounts: A person can open any number of KVP accounts in the post office; There is also no government restriction on the total number of accounts.
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Keep in mind that if you invest more than ₹ 50,000, PAN card is mandatory, and if you deposit more than ₹ 10 lakh, it is necessary to provide proof of source of income.
Any resident citizen of India can easily open an account in the Post Office Kisan Vikas Patra Scheme:
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Single Account: Any adult aged 18 years or above can open a single account in his/her name.
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Joint Account: Maximum 3 adults can open a joint account (Joint A or Joint B).
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In the name of children: Parents or legal guardians can open an account in the name of their minor children below 10 years of age. At the same time, a child above 10 years of age can operate this account in his own name also.
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Who is not allowed: Hindu Undivided Families (HUF) and Non-Resident Indians (NRIs) are not eligible to invest in Kisan Vikas Patra.
Although Kisan Vikas Patra is a long term scheme of 115 months, it also has flexible terms for the convenience of account holders in case of emergency:
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Lock-in of two and a half years: KVP account has a mandatory lock-in period of 2 years 6 months (30 months). You can prematurely close your account at any time after completion of 30 months with fixed interest rates.
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Withdrawal before two and a half years: If the account has to be closed before 2.5 years, it is possible only in case of death of the account holder, on the order of a court or in case of forfeiture by a gazetted officer.
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Guarantee for Loan (Collateral): If you suddenly need money, you do not need to break your KVP. You can avail instant loan or overdraft facility at very low interest rates by pledging your KVP certificate as security (collateral) in any government or private bank.
It is very important to understand the tax rules related to KVP before investing. No tax deduction is available under Section 80C of the Income Tax Act on the amount deposited in Kisan Vikas Patra. Additionally, the entire interest received on maturity is added to your annual income and is taxable under ‘Income from Other Sources’ as per your tax slab. However, the biggest relief is that no TDS is deducted by the post office at the time of maturity, that is, the entire amount is transferred to you in lump sum without any deduction and the tax has to be paid by the investor himself during his ITR filing. This scheme is most suitable for those investors who have a secure goal of doubling their lump sum capital in 9 to 10 years without any stock market worries.