Kisan Vikas Patra

Introduction

The most successful investor and financial legend Warren Buffett once said “don’t save what’s left after spending and spend what’s left after saving”. So, to build a secured future, one needs to start saving better. This can happen only when you diversify your funds into different investment and financial avenues.

If you are a conservative investor, the best investment product to park your funds would be government schemes. It’s risk-free and attains assured returns upon maturity, which you can use on a rainy day. Now the only difference between successful and unsuccessful investors is that the former ones hold the funds for a long-term despite the market swings.

Kisan Vikas Patra (KVP) is one such government scheme that’s designed particularly for long-term investors. Instead of loading funds into the savings account that barely give you inflation-beating returns, a scheme like KVP can add value to your investment. So, what benefits does this scheme offer to the customers? Can anyone invest in this scheme?

Meaning of Kisan Vikas Patra

Kisan Vikas Patra is a small-savings government-linked scheme launched by the Indian Post Office in 1998 for the people who are especially looking for long-term investments. This avenue is ideal for people who deter taking high-risk, but at the same time, expect good returns. Once you invest in the Kisan Vikas Patra scheme, you’ll receive a certificate from the Indian Post Office as an acknowledgment or confirmation of your investment.

Understanding about Kisan Vikas Patra

As the name suggests, initially, this scheme was particularly catered to only farmers, but then, it has changed into a public investment product. So, one can park their funds if he or she hits the eligibility criteria. The minimum investment in this scheme is Rs 1000, but there’s no such benchmark for the maximum limit.

The tenure for Kisan Vikas Patra is of 10 years or 120 months. If you invest a certain amount in this scheme today, you can expect double the returns on the last day of maturity. The investment in this scheme can be done in the following denominations - Rs. 1,000, Rs. 5,000, Rs. 10,000, and Rs. 50,000. This scheme not only allows you to build your wealth but also diversifies your portfolio.

You can get the Kisan Vikas Patra (KVP) investment certificate from certain public banks or Indian Post offices. As money laundering has become a concerning issue in the financial space, the government of India made PAN card obligatory for people who are investing Rs 50,000 and above in the scheme.

Types of Kisan Vikas Patra

The KVP investment is categorized into three different types, namely, single holder, joint A, and Joint B. Below you can learn about these accounts in detail.

• Single holder type − This account type is only given to an adult, this includes KVP investment on behalf of the minor. The certification will be titled in the name of the adult but not the minor or any other third party.

• Joint A type − This account type is designed specifically for two adult investors. Both the parties will be receiving the maturity amount once the tenure ends. On the flip side, when one party of the account dies, only one investor gets the same.

• Joint B type − This account is the same as joint A but the only subtle difference with joint B is that none of the parties gets the consideration at the end of maturity.

Benefits of investing in Kisan Vikas Patra

• Long-term savings − The Kisan Vikas Patra scheme is designed for people who are planning for a long-term investment. One can start with as little as Rs 1000 and can go up to as much as they want. This product is good for wealth creation and portfolio diversification.

• Offers security − No one wants to lose their investment money in the first place. Since it’s an instrument backed by the government, the investors can expect security along with guaranteed returns.

• Use it for loan collateral − In some cases, banks ask you to deposit something as collateral before they sanction you a loan. So, you can put the KVP scheme papers with the bank as a security by simply submitting the

• Assured returns − As the main theme of the scheme is to help famers build a corpus in advance to use them during a rainy day, Kisan Vikas Patra provides assured returns irrespective of market ups and downs.

• Taxation benefits − Though KVP scheme does not come under 80C of the Income Tax Act, all the withdrawals processed post maturity are excluded from taxation.

Eligibility of Kisan Vikas Patra

The Kisan Vikas Patra scheme was designed particularly for the farmers. After a period, it was modified into a regular financial product. Now, any person can invest in this scheme, considering the eligibility criteria set by the Indian Post Office. So, here are some of the aspects that you need to meet to obtain the benefits offered by the KVP scheme.

• The investor should be an Indian resident.

• The investor should be more than 18 years old.

• If a minor want to make an investment, an adult can do it on their behalf.

• NRIs and HUFs are excluded from KVP scheme.

Conclusion

Kisan Vikas Patra or KVP is a scheme launched by the Indian Post backed by the Government of India. The initial investment into this scheme is Rs 1000, and the tenure is for 120 months. There are three types of certificates in KVP– Single holder type, Joint A type, and Joint B type. The advantages of investing in KVP includes security, sound returns, tax exemption, and long-term savings.

FAQs

Q1. What are the types of certificates in Kisan Vikas Patra Scheme?

Ans) The investor in KVP scheme gets the following certificates based on the age group and investment made – Single holder type certificate, Joint A type certificate, and Joint B type certificate.