Financial schemes that double an investment in a reasonable period of time have always attracted people. These schemes can be targeted to situations when money becomes scarce to fulfill needs of a person’s life. Kisan vikas patra is one such scheme from Indian post office that doubles one time investment in a period of 96 months. If a person purchases kisan vikas patra for Rs.5,000 he/she will be getting back Rs.10,000 by the end of 8 years and 7 months.
How kisan vikas patra works:-
Kisan vikas patra works on an interest rate that is compounded annually. KVP certificate has a Lock-in period of 30 months from the date of purchase. Since the interest rate is compounded annually the longer the period of deposit the higher is the earning. By the end of 96 months the amount invested on purchase will be doubled.
Salient features of kisan vikas patra:-
Kisan vikas patra with the backup of Indian government is trusted by people all over the country. The scheme can be accessed from any post office by a person who is above 18 years of age. KVP can be purchased by an adult for self or on behalf of a minor, in a joint name, or by a trust. KVP cannot be purchased by nris and members of a Hindu undivided family.
KVP has a maturity of eight years and seven months and during this period KVP can be transferred from one individual to another under standard rules and procedures.
The KVP form has to be filled and submitted along with cash/cheque/draft at the post office. An identity slip may be procured from the post office. At the time of maturity, the KVP has to be submitted at the same post office for redemption. However, maturity proceeds can be claimed from any post office by submitting the identity slip received at the time of application of KVP.
Premature withdrawal: 1. If the money is withdrawn before the completion of one year, no interest is payable. 2. After one year and before the lapse of 2 years 6 months a simple interest is applied to the deposit amount 3. Any time after 2 years and 6 months, but before the maturity period, interest is calculated as per Government regulations.
The maturity proceeds of KVP continue to earn bank interest as specified from time to time till it is withdrawn by the investor.
Two or more people can purchase KVP jointly and the conditions of amount payable at the end of period have classifications accordingly.
KVP is available in denominations of Rs.100, Rs.500, Rs.1000, Rs.5,000, Rs.10,000 and also Rs.50,000. There is no maximum limit for investments in KVP. Denominations of Rs 50,000 are available only at head post office of a place.
Investment in KVP does not enjoy any tax rebate. The interest accrued every year is treated as income and taxed accordingly. No TDS is deducted on the principal amount or interest at the time of withdrawal.
Factors to be considered while purchasing KVP:-
There are few factors that a person needs to be aware of while investing in a KVP.
KVP is a certificate that will have the amount invested and amount payable at maturity with date of commencement and date of maturity mentioned. If this certificate is lost during the term then a duplicate certificate can be obtained on application. To be on the safer side a person can ask for a slip that acts as an identity for purchase of KVP from the post office during purchase. This slip can be produced during the application for duplicate KVP in case of loss or mutilation. However these certificates are not available in electronic media as of now which eliminates instances of loss/mutilation/theft, etc.
On untimely death of KVP holder, the amount on maturity will be payable to nominee. If there are no nominees then the amount will be payable to legal heir of the KVP holder. At the time of purchase there is a clause in KVP form that gives the person an option to choose nominee during the plan term. A KVP holder can always state a nominee during the term of KVP by signing to this particular clause.
Since the investment in KVP is not eligible for deduction under Section 80C, it is most suited for individuals who have completed their requisite investments for qualification under Section 80C.
Kisan vikas patra serves as a steady income for senior citizens during their retirement years. With minimum conditions and maximum transparency in the scheme, it is easy for a person to understand working of KVP unlike most of the plans (with hidden clause) provided by private organizations.
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