Kisan Vikas Patra, also popularly known as KVP is one of a very good investment scheme with high interest rates. KVP has the following main features –

  • Money doubles in 8 years and 7 months.
  • Rate of interest 8.40% compounded annually.
  • Minimum Investment Rs. 500/- No maximum limit.
  • Two adults, Individuals and minor through guardian can purchase.
  • Companies, Trusts, Societies and any other Institution not eligible to purchase.
  • Non-Resident Indian/HUF are not eligible to purchase.
  • Facility of encashment from 2 ½ years.
  • Maturity proceeds not drawn are eligible to Post office Savings account interest for a
    maximum period of two years.
  • Facility of reinvestment on maturity.
  • Patras can be pledged as security against a loan to Banks/Govt. Institutions.
  • Patras are encashable at any Post office before maturity by way of transfer to desired
    Post office.
  • Patras are transferable to any Post office in India.
  • Patras are transferable from one person to another person before maturity
  • Duplicate can be issued for lost, stolen, destroyed, mutilated and defaced patras.
  • Nomination facility available.
  • Facility of purchase/payment of Kisan vikas Patras to the holder of Power of attorney.
  • Rebate under section 80 C not admissible.
  • Interest income taxable but no TDS
  • Deposits are exempt from Wealth tax.

Facility for premature encashment as per the table given below (for the KVP purchased on or after 1st March 2003)

Maturity value for Rs. 1,000/- denomination 

AfterAmount Payable
2 years 6 months or more but less than 3 years1170.51
3 years more but less than 3 years 6 months1207.95
3 years 6 months or more but less than 4 years 1267.19
4 years or more but less than 4 years 6 months 1310.80
4 years 6 months or more but less than 5 years 1355.90
5 years or more but less than 5 years 6 months 1435.63
5 years 6 months or more but less than 6 years 1488.49
6 years or more but less than 6 years 6 months1543.30
6 years 6 months or more but less than 7 years1649.13
7 years or more but less than 7 years 6 months1713.82
7 years 6 months or more but less than 8 years 1781.06
8 years or more but less than 8 years 7 months1850.93

Tax Liability on KVP – Interest accrued on yearly basis will be considered as income  for Income Tax purposes.

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