CENTRAL GOVERNMENT SCHEMES
Kisan Vikas Patra-2015
Launched: 3 March 2015 (Re-Launched)
Main Objective: To provide safe and secure investment avenues to the small investors.
Kisan Vikas Patra is an investment scheme wherein the invested money will get doubled in 8 years and 4 months. However, investors would not get any tax benefit for their investment in Kisan Vikas Patra unlike in PPF. The Kisan Vikas Patra certificates would be available in the denominations of Rs 1,000, 5,000, 10,000 and 50,000 and there is no upper limit on investment in KVPs.
About Complete Scheme
Kisan Vikas Patra is a small savings instrument that will facilitate people to invest in a long term savings plan. This scheme was originally introduced by the Government of India in 1988 and was again reintroduced in 2014 with some changes. Even though this scheme was popular, a Government Committee formed in 2011 suggested that KVP could be misused for purposes like money laundering. In 2014, Kisan Vikas Patra was relaunched with a number of changes including mandatory PAN Card proof for investments over Rs.50,000 and income source proof for investments exceeding Rs.10 lakh.
The main advantage of opening a KVP investment is the availability and ease of process - the Small Savings Directorate offers KVP certificates in all Post Offices across the country. Any resident Indian can invest in a KVP scheme and can obtain a certificate either jointly, individually or in the name of a minor. The principal amount invested in KVP will be doubled in a time of 8 years and 4 months or 100 months. The main target audience for this scheme is people in semi-urban and rural areas where people easily fall prey to Ponzi schemes.
With an effective interest rate of 8.7%, Kisan Vikas Patra is was becoming a popular investment instrument given that it is of low-risk and also guarantees assured returns. However the interest rates have been slashed to 7.8% in the 2016 Union Budget which will have its effect in FY 2016-17.
Kisan Vikas Patra Benefits
The following are some of the benefits of investing in a Kisan Vikas Patra Scheme.
1. A KVP certificate is offered in multiple denominations that gives flexibility to the customers. The denominations vary from Rs.100 to a maximum of Rs.50,000.
2. It is a scheme offered by the Government of India and hence the investor can be sure of returns on invested amount. Under KVP, the holder will get double the principal in a short period of eight years and four months.
3. People who are looking for risk free investment option will benefit from KVP scheme. Also, it is unaffected by inflation as the interest rate remains the same.
4. There is no cap on the amount that one can invest in KVP. Depending on the purchase power, a person can buy any amount.
5. Kisan Vikas Patra certificate can be presented as collateral against loans. Investors can use the same to obtain a loan from banks.
6. Applicants also have the option to withdraw the amount prematurely in KVP. The lock in period is two years and six months.
7. Kisan Vikas Patra is transferable from one person to the other. To pass on the benefits to the new holder, the owner must fulfill all required formalities. Before transferring it to a new holder, it is important to receive an approval at the post office.
8. A KVP holder can enjoy tax benefits. The income from KVP is taxable but there is no tax deduction on entire money received at maturity, there is no tax deduction at source.