We all look into the best saving schemes for the long term. Remember the time when we used to save up in piggy banks and saving accounts? But, when we save in traditional ways – we get back only what we saved and nothing more. That has changed now – especially with different schemes allowing interest growth on the savings we have accumulated. If the scheme is backed by the government – even better, right. One such is the KVP scheme. If you are still wondering what it is, we can find it here.
What is Kisan Vikas Patra?
In 1988, India Post launched the Kisan Vikas Patra, a small savings certificate initiative. Its primary goal is to instill long-term financial discipline in people. According to the most recent update, the scheme’s duration is now 124 months (10 years and 4 months). The minimum investment is Rs. 1000, and there is no maximum. And if you invest a lump sum today, you will receive twice as much at the end of the 124th month.
Originally, it was intended for farmers to enable them to save for the long term, hence the name. It is now open to everyone.
To reduce the possibility of money laundering, the government made PAN Card proof mandatory for investments exceeding Rs. 50,000 in 2014. To deposit Rs. 10 lakhs or more, you must provide proof of your income (salary slips, bank statement, ITR document, etc.). It is a low-risk savings platform where you can park your money safely for a set length of time.
Furthermore, the AADHAAR number must be submitted as verification of the account holder’s identification.
Just like every other scheme, KVP applicants too have to fit into certain criteria. And if you want to know if you come under that list, you can find out here.
Who can apply for the Scheme?
- The applicant must be at least 18 years old and a resident Indian.
- Kisan Vikas Patra applications can be made in the applicant’s own name or on behalf of a minor.
- Kisan Vikas Patra can be invested in by trusts. HUFs (Hindu Undivided Family) and non-resident Indians (NRIs) are not permitted to invest in KVP.
If you can invest in this scheme – let’s find out how.
How to Register for the Scheme?
Investing in Kisan Vikas Patra is straightforward, as explained below.
Step 1: Gather the application form, Form A, and fill it out with the required information.
Step 2: Return the completed form to the post office or bank.
Step 3: If you invest in KVP through an agent, the agent must complete Form A1. These forms are available for download online.
Step 4: The Know Your Customer (KYC) procedure is required, and you must produce a copy of your ID and address proof (PAN, Aadhaar, Voter’s ID, Driver’s License, or Passport).
Step 5: Make the deposit after the documents have been confirmed. Payment can be paid in cash, locally executed cheque, pay order, or demand draught drawn in the postmaster’s favor.
Step 6: Unless you pay by check, pay order, or demand draw, you will receive your KVP certificate immediately. Keep this safe since you will need to submit it when you reach maturity. You can also ask for the certificate to be emailed to you.
In short, if Kisan Vikas Patra appears to be a reasonable investment that aligns with your financial objectives, invest immediately. It is simple to open and manage. All you have to do is have the money ready and go to the nearest post office.
What Interest Rates does the Scheme offer?
KVP interest rate fluctuates depending on the number of years invested in KVP at the time of purchase. The current annual interest rate is 6.9% for the year 2021. You will get a higher return on your money if you compound the interest.
So, here let’s look at how they will benefit you.
Long-term Savings – With the Kisan Vikas Patra, you can begin saving as early as Rs. 1000. Kisan Vikas Patra certificates can be purchased for as little as Rs. 1000 and as much as you wish. There is no upper limit to the amount you can invest. In 100 months, or 8 years and 4 months, the value is said to have doubled. The value that the holder will get at the end of the period is stated on the Kisan Vikas Patra certificate.
100% Security – We all want to feel secure about the investments we make. That is exactly what the Kisan Vikas Patra scheme provides. Because it is a government-owned plan, the returns are guaranteed. Because the amount you will receive is stated on the certificate, you will have security over your investment and the amount you will receive at the conclusion of the period.
Fixed Interest Rate – Kisan Vikas Patra’s interest rate is fixed on the amount invested. This rate of interest guarantees the doubling of the principal amount in 100 months and is secure because it is a government bond.
Loan Collateral – When asking for a loan, the Kisan Vikas Patra certificate can be used as collateral. Before providing you with a loan, most banks and financial organizations would take this certificate as collateral.
Non-Transferable – Only the holder of the Kisan Vikas Patra certificate is eligible for the benefits of the Kisan Vikas Patra. The authorization of the Postmaster, as well as various additional requirements, are required to have this switched to another name.
Tax Advantages – Tax is not deducted at the time of encashment or disbursement of the Kisan Vikas Patra plan; it is TDS exempt and paid in full to the bearer. However, it is the certificate holder’s responsibility to pay the taxes on the interest earned during the scheme’s duration. This scheme is excluded from Wealth Tax entirely.
Physical Investment Instruments – The Kisan Vikas Patra saving program is available in the form of a simple printed certificate that can be saved in a physical form. This certificate has no depository form and cannot be exchanged on the secondary market.
Fixed Lock-in Time – This scheme has a fixed lock-in period of two and a half years. If you have an emergency financial need, you can cash this money early after two and a half years from the date of issuance and receive some interest on it.
Now you know how this scheme will benefit you. Now that you know enough about the scheme that you would know if it is something you would want to save with.
Government-backed schemes are much safer, and the best part is that it builds enough security within you to be investing for the long term.