Kisan Vikas Patra is a saving certificate scheme which was first launched in
1988 by India Post. It was successful in the early months but afterwards the
Government of India set up a committee under supervision of Shyamala Gopinath
which gave its recommendation to the Government that KVP could be misused. Hence
the Government of India decided to close this scheme and KVP was closed in 2011
and the new government re-launched it in 2014.
KVP certificates are available in the denominations of Rs 1000, Rs 5000, Rs
10000 and Rs 50000. The minimum amount that can be invested is Rs 1000. However,
there is no upper limit on the purchase of KVPs.
Kisan Vikas Patra does not offer any income tax benefits to the investor. No
deduction u/s 80C is allowed on investment and the interest received upon
maturity/withdrawal is fully taxable. However, withdrawals are exempted from Tax
Deduction at Source (TDS) upon maturity.
The amount (Principal) invested in Kisan Vikas Patra would get doubled in 124
months as per existing rate of interest.The prevailing rate of interest is 6.9%
from April 1, 2020.
The exact interest rate is obtained by using the formula (2^(12÷124) x 100) - 100 = 6.9379698571, or 6.94.
The amount of KVP can be withdrawn after 124 months (10 years and 04 months). The maturity period of a KVP is 2 years 6 months (30 months). Premature encashment of the KVP certificate is not permissible. The certificates can only be encashed in event of the death of the holder or forfeiture by a pledge or on the order of the courts.
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