Kisan Vikas Patra is a saving scheme to encourage the habit of savings among individuals. It doubles a one-time investment. Earlier, Kisan Vikas Patra was in the form of a certificate which was issued by the post offices in India. Now, KVP can be in the form of account which can be opened with an initial deposit of Rs. 1,000 and in multiples of Rs. 100 thereafter.
Government of India has withdrawn previous KVP rules with immediate effect. Now, the government has notified the new scheme w.e.f. 12-12-2019.
Salient features of the KVP scheme effective from 12-12-2019 is as under:
- Who can open KVP account?
Both resident and a non-resident individual can invest in this scheme. Any individual can open an account under these schemes by submitting an application in Form-1.
- What are the types of KVP account?
There are 3 types of KVP account-
- Single Holder Type Account: An adult may open a Single Holder Type Account for himself or on behalf of a minor or a person of unsound mind of whom he is the guardian, or by a minor who has attained the age of ten years.
- Joint A- Type Account: Joint A-Type Account may be opened jointly in the names of up to 3 adults payable to all the account holders jointly or to the survivors.
- Joint B- Type Account: Joint B-Type Account may be opened jointly in the name of up to 3 adults payable to any of the account holders or to the survivor or survivors.
- How many KVP accounts can be opened?
An individual may open any number of accounts.
- How much minimum amount to be deposited in KVP account?
A minimum of 1000 rupees and any sum in multiples of 100 rupees may be deposited in an account.
- How much maximum amount can be deposited?
There is no maximum limit for deposit in an account or accounts held by an account holder
- Will investor get the tax benefit of investment into KVP?
The investment made under this scheme is not eligible for any deduction under the Income-tax Act.
- What is tax treatment returns on KVP account?
Interest earned under this scheme is taxable under the head ‘Income from other sources’. However, senior citizens can claim a deduction of up to Rs. 50,000 under Section 80TTB in respect of interest earned from the deposit made under the scheme.
- In how much time amount in KVP account is doubled?
The amount deposited under this scheme shall double on maturity. The maturity period of an account shall be 9 years and 5 months commencing on the date of deposit. This tenure has been decided on the basis of the prevailing rate of interest. Any change in the rate of interest will accordingly change the maturity period.
- Can there be pre-mature closure of an account?
The account opened under this scheme can be closed before its maturity by applying Form-3. The account under this scheme can be closed prematurely in the following circumstances:
- In the event of the death of the account holder in a single account or any/all the account holders in a joint account, the account may be closed.
- On the forfeiture of the deposit by the pledgee being a Gazetted Officer; or
- On order by a court.
If account is closed under the circumstances prescribed in above point (a), (b) or (c) before the expiry of 2.5 years, the principal amount along with the simple interest calculated at the rates applicable for the post office savings account (4% per annum) shall be paid for the complete months for which the account has been held.
- How much amount investor gets on pre-mature closure of account?
If such account is closed after expiry of 2.5 years from the date of opening of the account, the amount payable in respect of every Rs. 1,000 shall be calculated in accordance with the following:
|Period from the date of the account to the date of its premature closure||The amount payable inclusive of interest (Rupees)|
|2.5 years – 3 years||Rs. 1,173|
|3 years – 3.5 years||Rs. 1,211|
|3.5 years – 4 years||Rs. 1,251|
|4 years – 4.5 years||Rs. 1,291|
|4.5 years – 5 years||Rs. 1,333|
|5 years – 5.5 years||Rs. 1,377|
|5.5 years – 6 years||Rs. 1,421|
|6 years – 6.5 years||Rs. 1,467|
|6.5 years – 7 years||Rs. 1,515|
|7 years – 7.5 years||Rs. 1,564|
|7.5 years – 8 years||Rs. 1,615|
|8 years – 8.5 years||Rs. 1,667|
|8.5 years – 9 years||Rs. 1,722|
- Can I pledge KVP account?
An account may be pledged or transferred as security, on an application made by the depositor in Form-4 supported with an acceptance letter from the pledgee. Transfer of an account under this Scheme may be made to:
- the President of India or the Governor of a State in his official capacity;
- the Reserve Bank of India or a Scheduled Bank or a Cooperative Society, including a Co-operative Bank;
- a public or private corporation or a Government company;
- a local authority; or
- a housing finance company approved by the National Housing Bank and notified by the Central Government:
If account opened on behalf of a minor or a person of unsound mind, then the transfer shall not be permitted under this Scheme unless the guardian of the minor or the person of unsound mind, as the case may be, certifies in writing that the minor or the person of unsound mind, as the case may be, is alive and that the transfer is for the benefit of the minor or the person of unsound mind.
- Can KVP account be transferred?
An account opened under this scheme can be transferred by the account holder to another individual who is eligible to open an account under this scheme. Such a transfer can be made under the following circumstances:
- In the event of the death of the account holder in a single account or all the account holders in a joint account, the account shall be transferred to the legal heirs or the nominee, as the case may be;
- In the event of the death of any of the account holders in a joint account, the account shall be transferred to the surviving account holder or holders, as the case may be;
- On the order of the court, the account shall be transferred to the court or any other individual as may be specified in the order of the court;
- In the case of pledging, the account shall be transferred in the name of the transferee.