Skip to content
Home » History and Purpose of Kisan Vikas Patra

History and Purpose of Kisan Vikas Patra

Kisan Vikas Patra (KVP), launched in 1988, is a savings scheme introduced by the Indian Post Office to cultivate long-term financial discipline, especially among the farming community. It aims to offer a secure, low-risk platform for citizens to invest their surplus capital. KVP promises to double the one-time investment over approximately 10 years (120 months).
KVP is available to all Indian citizens aged 18 and above, with exclusions for Non-Resident Indians (NRIs) and Hindu Undivided Families (HUF). The minimum investment starts at Rs. 1,000, with no upper limit. Backed by a fixed interest rate set by the Ministry of Finance, KVP offers a steady return on investment. KVP’s interest is tax-exempt up to Rs.10,000 per financial year, under Section 80TTA of the Income Tax Act. Premature withdrawal is also allowed after 2.5 years. For transparency and against potential misuse, investments above Rs. 50,000 require PAN Card proof, and those over Rs. 10 lakh need income proofs.

Overview of Who Can Invest in KVP
KVP is a low-risk savings platform open to all Indian citizens over 18 years. It promotes financial discipline, especially among farmers. All Indian adults can invest, excluding HUFs and NRIs. Adults can also invest on behalf of minors or individuals of unsound mind, and trusts can purchase KVP certificates, broadening the range of potential investors.
Investments over Rs. 50,000 need a PAN Card, and investments exceeding Rs. 10 lakh require income proofs. Aadhaar numbers are compulsory for identity verification. KVP is an excellent tool for risk-averse individuals with surplus funds that they may not need in the immediate future, offering a fixed return with tax exemption on the interest earned up to Rs.10,000.

Significance of KVP in India’s Financial Landscape
KVP is a crucial financial instrument in India’s financial framework, incepted by the Indian Postal Service in 1988 to encourage long-term financial discipline, particularly among farmers. It promises to double a one-time investment over a decade, providing a substantial incentive for individuals seeking low-risk investments.
KVP is particularly significant in rural India, where traditional banking services are limited. KVP offers an accessible platform for rural population savings, promoting a savings culture across geographical locations.
KVP offers guaranteed returns, adding a security layer for investors. Its tax benefits make it an attractive savings option. As a low-risk platform, KVP ensures a viable savings platform for those unable to afford high financial risks.
The government uses the KVP scheme for resource mobilization, with funds directed towards the National Small Savings Fund (NSSF), significantly aiding in financing the government’s fiscal deficit. Thus, KVP helps in maintaining the country’s economic stability while fostering financial discipline among citizens, making it a cornerstone of India’s financial landscape.

Understanding Kisan Vikas Patra
Kisan Vikas Patra (KVP) is a unique government-backed savings instrument that was introduced by the Indian Postal Department in 1988. Designed to encourage long-term savings, especially among farmers, KVP provides a guaranteed return, promising to double the principal amount over a fixed period, typically ten years. KVP is essentially a savings certificate scheme where a person can invest a minimum of Rs. 1,000, and there is no upper limit. The interest earned is compounded annually, making it a reliable source of income. The most notable aspect of KVP is its low-risk nature – since it’s government-backed, the chances of losing your principal amount are virtually nil, providing a safe investment avenue for the risk-averse investors.

Types of Kisan Vikas Patra Certificates
There are three types of KVP certificates available to the public, catering to different needs and circumstances. They are: Single Holder Type, Joint ‘A’ Type, and Joint ‘B’ Type.

  • Single Holder Type Certificate: As the name suggests, this certificate is issued to an individual adult for himself or on behalf of a minor. The ownership and benefits are solely held by one person.
  • Joint ‘A’ Type Certificate: This form of certificate is issued to two adult co-holders and the payment is made to both holders jointly or to the surviving holder. In this case, the benefits will be equally shared by both holders.
  • Joint ‘B’ Type Certificate: This certificate is also issued to two adults. However, it differs from the Joint ‘A’ type in that the benefits will be paid to either of the holders, or to the survivor.

The Concept of Maturity in Relation to KVP
The term ‘maturity’ in the context of KVP refers to the period it takes for an investment to double. As per the current norms, a KVP certificate matures in approximately 10 years (120 months). However, the exact duration may vary slightly based on the prevailing interest rate at the time of investment. It’s worth noting that while KVP allows premature withdrawal after 2.5 years from the date of issue, investors will receive the maximum benefits only if they hold onto their investment until maturity.
To sum up, understanding KVP’s includes its types and the concept of maturity, will aid potential investors in making informed decisions and leveraging this safe, low-risk financial instrument for optimal benefits.

Features and Benefits of Kisan Vikas Patra

Kisan Vikas Patra (KVP), a savings certificate scheme, has been recognized as a secure investment platform that provides a host of benefits and features. Below, we delve into the key features and advantages of this scheme:
Guaranteed Returns: One of the most compelling features of KVP is its guaranteed returns. As a government-backed initiative, it promises investors a high return over a tenure of approximately 10 years. Uniquely, these returns are not influenced by volatile market fluctuations, rendering KVP a reliable investment vehicle.
Capital Protection: The principal amount invested in KVP is fully protected as it remains untouched by market risks. Thus, regardless of economic ups and downs, investors are assured to receive the invested amount and the promised interest at the time of maturity.
Attractive Interest Rate: The KVP scheme currently offers an appealing interest rate of 7.5% per annum (Q1 FY 2023-24). This rate enables investors to double their investment within 115 months, contributing to its popularity. Notably, the interest rate is subject to change periodically based on revisions by the Finance Ministry.
Flexible Tenure: The maturity period for KVP is set at 120 months (10 years). However, it allows the flexibility of premature withdrawal after 2.5 years from the issuance date, under certain conditions.
Tax Implications: KVP offers tax exemption on the interest earned up to Rs.10,000 per financial year, under Section 80TTA of the Income Tax Act. However, there’s no provision for tax deductions under Section 80C of the Act for investments in KVP.
Loan Facility: Investors can leverage their KVP certificate to secure a loan from banks or other financial institutions. The certificate can be pledged as collateral security, providing additional financial flexibility.
Nomination Facility: The scheme allows investors to nominate one or more individuals who will receive the maturity amount in the event of their death. This nomination can be changed or cancelled at any time during the scheme’s tenure.

In essence, KVP is more than just a savings certificate scheme; it’s a comprehensive financial tool that caters to the need for secure and beneficial investment options among India’s citizens.

Interest Rates and Maturity Period of Kisan Vikas Patra
Understanding the interest rates and maturity period is crucial for any prospective investor in the Kisan Vikas Patra (KVP) scheme. Here, we delve into these aspects to offer an in-depth understanding of KVP’s workings.

Current Interest Rates for KVP
As of the first quarter of the fiscal year 2023-24, the KVP offers an annual interest rate of 7.5%. This rate is set to double an investor’s principal amount within approximately 115 months. It’s important to note that the Ministry of Finance determines these interest rates and revises them quarterly based on various economic parameters. The accrued interest is compounded annually and is taxable as per the investor’s respective tax slab under the category ‘Income from Other Sources’.

Maturity Period Details
The KVP scheme exhibits a maturity period of 120 months, or 10 years, according to the latest guidelines. This means that an investment made today will yield double its original value at the end of the tenth year. Alongside the interest rate, the Ministry of Finance also revises the maturity period quarterly. KVP, however, provides some liquidity, permitting premature withdrawal of funds after the initial 30-month lock-in period, or 2 years and 6 months.

Periodical Revision of Interest Rates and Maturity Periods
The Ministry of Finance periodically reviews and adjusts the interest rates and maturity periods of the KVP scheme. Factors such as inflation, economic growth, and prevailing market conditions contribute to these revisions. These changes are announced every quarter and become effective from the first day of the subsequent quarter. For instance, the present interest rate and maturity period, applicable from April 1, 2023, to June 30, 2023, will undergo a revision starting July 1, 2023.
In essence, the flexible and adaptable nature of the KVP scheme’s interest rates and maturity period, in response to economic fluctuations, helps ensure it remains a viable and attractive investment option for individuals across India.

How to Buy and Redeem KVP Certificates
The process of buying and redeeming Kisan Vikas Patra (KVP) certificates is a streamlined procedure, designed to be simple and user-friendly for investors.

Buying KVP Certificates

If you wish to purchase KVP certificates, follow the steps outlined below:

  • Begin by visiting your nearest post office or a public sector bank that offers KVP certificates.
  • Complete the application form (Form A) and submit it with necessary documentation including an identity proof, address proof, and PAN card.
  • Select your preferred type of certificate, which can be single holder, joint ‘A’, or joint ‘B’. Also, choose your desired mode of holding – e-mode or passbook mode.
  • Pay the desired investment amount. Remember that the minimum investment limit is Rs. 1,000, with no maximum limit. You can make the payment via cash, cheque, or demand draft.
  • Upon completion of the process, you’ll receive your KVP certificate in either e-mode or passbook mode, based on your choice.

Redeeming KVP Certificates

To redeem your KVP certificates, follow these steps:

  • Upon the completion of the maturity period of 120 months or after the lock-in period of 30 months for premature withdrawal, visit the post office or bank where you bought your KVP certificate.
  • Complete the application form (Form C) and submit it with your original certificate and an identity proof.
  • You will receive your maturity amount or premature withdrawal amount via cash, cheque, or bank transfer, according to your preference.

E-Mode and Passbook Mode

KVP certificates can be held in two distinct modes: e-mode and passbook mode.

The e-mode offers an electronic record of your certificate, accessible through internet banking, much like e-FD/RDs. It provides convenience and security, eliminating the risk of loss or damage to a physical certificate.
The passbook mode, on the other hand, offers a physical representation of your certificate, similar to a savings account passbook. This mode ensures easy liquidity, without the requirement for internet banking to cash the certificate.

Documents Required for Buying and Redeeming KVP

The documents necessary for buying KVP include:

  • Application form (Form A)
  • Identity proof (such as Aadhaar card, PAN card, voter ID card, passport, or driving license)
  • Proof of residence can include documents such as your Aadhaar card, passport, or a utility bill.
  • PAN card (for investments above Rs. 50,000)
  • Income proofs (for investments exceeding Rs. 10 lakh)

For redeeming KVP, the following documents are required:

  • Application form (Form C)
  • Original certificate
  • Identity proof

It’s clear that investing in and redeeming KVP certificates is a process made convenient and accessible for a wide range of investors.

Understanding Taxation and Comparing Tax Implications with Other Post Office Schemes
Understanding Taxation and Comparing Tax Implications with Other Post Office Schemes
Investing in Kisan Vikas Patra (KVP) involves certain tax implications which an investor should be aware of before deciding to put their money into this scheme. Here, we break down the taxation on KVP and compare it with other post office savings schemes for a clearer perspective.

Taxation of KVP

The taxation rules for KVP can be broken down as follows:

  • Investment amount: Unlike certain other savings instruments, the investment made in KVP does not qualify for any tax deductions under Section 80C or any other sections of the Income Tax Act.
  • Interest income: The interest earned on KVP is taxable under ‘Income from Other Sources’ as per your applicable tax slab rate. There are no exemptions or rebates available on this interest income.
  • Maturity amount: Although the maturity proceeds from KVP are exempt from tax deducted at source (TDS) under section 194A of the Income Tax Act, the income must be declared in your Income Tax Return, and taxes must be paid as per your income tax slab.

For example, if you have invested Rs. 1,00,000 in KVP and at maturity, you receive Rs. 2,00,000, you are liable to pay tax on the interest amount of Rs. 1,00,000 as per your income tax slab rate.

Comparing Tax Implications with Other Post Office Schemes
To give a better perspective, let’s compare the tax implications of KVP with other popular post office schemes:

  • Post Office Savings Account (POSA): Interest income earned from a POSA enjoys a tax exemption up to Rs. 10,000 section 80TTA, the Income Tax Act.Any interest earned beyond this limit is taxable as per the applicable tax slab.
  • Post Office Time Deposit (POTD): In contrast to KVP, POTD investments are eligible for tax deductions up to Rs. 1.5 lakh under Section 80C, the Income Tax Act.However, like KVP, the interest income from POTD is fully taxable.
  • Post Office Recurring Deposit (PORD) and Post Office Monthly Income Scheme (POMIS): Much like KVP, PORD and POMIS don’t offer any tax benefits on the investment amount. Also, the interest earned on both these schemes is fully taxable.
  • Post Office Senior Citizen Savings Scheme (POSCSS) and Post Office National Savings Certificate (PONSC): Both these schemes offer tax deductions on the invested amount up to Rs. 1.5 lakh under Section 80C. The interest income, however, is fully taxable. In the case of POSCSS, the interest income is subject to TDS.

To summarize, while KVP offers a safe and reliable form of investment with guaranteed returns, it doesn’t provide any tax benefits on the investment amount or the interest earned. This sets it apart from several other post office schemes and other investment avenues, making tax awareness a crucial aspect for potential investors in KVP.

Understanding the Pros and Cons of Investing in Kisan Vikas Patra (KVP)
Investing in KVP can be a strategic decision for many, however, understanding its benefits and drawbacks is essential for informed decision-making. Furthermore, comparing KVP with other savings schemes provides a better perspective for potential investors.

Advantages of KVP

KVP holds certain attractive features for investors:

  • Safety and capital protection: Backed by the government, KVP investments carry a sovereign guarantee, ensuring the security of your invested capital.
  • Accessibility and availability: KVP can be purchased from any post office or select public sector banks. The process is quite straightforward with minimal documentation and compliance with Know Your Customer (KYC) norms.
  • Guaranteed returns: KVP assures to double your investment over a fixed tenure, making it immune to volatile market fluctuations.
  • Flexibility and convenience: There is no upper limit for investment in KVP and it can be held in both e-mode and passbook mode as per the investor’s preference.
  • Liquidity and transferability: KVP can be encashed post the lock-in period of 30 months. It also allows transferability from one person to another and from one post office to another.

Disadvantages of KVP

Like any other investment, KVP too comes with certain limitations:

  • Lower interest rate: Compared to other investment avenues such as mutual funds or fixed deposits, KVP offers a relatively lower return rate.
  • Inflation risk: With a fixed interest rate, the real value of KVP investment may erode over time due to inflation.
  • No tax benefits: KVP does not offer any tax benefits either on the invested amount or the interest earned, which is taxable as per the individual’s tax slab.
  • Potential misuse: Being a bearer instrument, KVP carries a risk of misuse for money laundering purposes as the source and destination of funds cannot be tracked.

Comparison of KVP with Other Saving Schemes
Comparing KVP with other popular savings schemes like Public Provident Fund (PPF), National Savings Certificate (NSC), Fixed Deposits (FD), Recurring Deposits (RD) and Monthly Income Scheme (MIS) provides a broader view of its position in the market. The following table offers a detailed comparison based on interest rate, maturity period, tax benefits, and liquidity

SchemeInterest RateMaturity PeriodTax BenefitsLiquidity
KVP6.9% p.a.120 monthsNoneAfter 30 months
PPF7.1% p.a.15 yearsOn investment up to Rs. 1.5 lakh under section 80C; On interest income; On maturity amountAfter 5 years (certain conditions apply)
NSC6.8% p.a.5 yearsOn investment up to Rs. 1.5 lakh under section 80C; On interest income deemed to be reinvested except for the last yearAfter maturity
FDVariesVariesOn investment up to Rs. 1.5 lakh under section 80C for 5-year tax saving FD; On interest income up to Rs. 10,000 under section 80TTA for savings account FDAfter maturity or with penalty
RDVariesVariesNoneAfter maturity or with penalty
MIS6.6% p.a.5 yearsNoneAfter maturity

In conclusion, while KVP offers secure and guaranteed returns, its lower interest rate and lack of tax benefits might not appeal to all investors. It’s essential to weigh these pros and cons, and make a comparison with other schemes before investing.


Kisan Vikas Patra (KVP) stands as a robust savings instrument, particularly for individuals seeking safe, guaranteed returns without a ceiling on the investment amount. Its widespread accessibility, sovereign guarantee, and the promise of doubling the investment make it a reliable choice. However, its lower returns when compared to other market-linked investment avenues, lack of tax benefits, and susceptibility to inflation risk are important factors that potential investors must consider. A detailed analysis of your financial goals, risk appetite, and return expectations is necessary before choosing KVP or any other savings scheme. Ultimately, diversification remains key in any well-balanced investment portfolio.

FAQs about Kisan Vikas Patra:

What exactly is Kisan Vikas Patra?

Kisan Vikas Patra, often abbreviated as KVP, is an investment scheme offered by the Indian Post Office. It’s designed to double a one-time investment over approximately 10 years. KVP promotes long-term financial discipline, especially amongst farmers, offering them a stable, low-risk savings avenue.

Who can make an investment in Kisan Vikas Patra?

KVP is accessible to all Indian citizens who are 18 years old or above. An adult may also invest on behalf of a minor or an individual of unsound mind. However, it’s important to note that Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not permitted to invest in this scheme.

What is the minimum and maximum investment limit for Kisan Vikas Patra?

The Kisan Vikas Patra scheme has a minimum investment threshold of Rs. 1,000, while there is no defined maximum limit. That said, investments exceeding Rs. 50,000 necessitate proof via PAN Card, and for investments over Rs. 10 lakh, income proofs must be furnished.

What types of certificates are available with Kisan Vikas Patra?

KVP offers three types of certificates:
Single Holder Type Certificate: These certificates are issued to an individual, either for their own benefit or on behalf of a minor.
Joint ‘A’ Type Certificate: Issued jointly to two adults, payable to both holders or to the survivor.
Joint ‘B’ Type Certificate: Issued jointly to two adults, payable to either of the holders or to the survivor.

What is the interest rate and tenure of Kisan Vikas Patra?

The interest rate and tenure for KVP are set by the Ministry of Finance and can be revised every quarter. As of the most recent update, KVP provides an annual interest rate of 6.9%, and the scheme matures in 120 months (or 10 years).

How can I purchase a Kisan Vikas Patra certificate?

KVP certificates can be purchased from any post office by completing an application form and providing necessary documentation, including proof of identity, address, and PAN card. Alternatively, you can also purchase a KVP certificate online via India Post’s website or mobile app.

Is it possible to withdraw funds from Kisan Vikas Patra before it matures?

Yes, premature withdrawal from Kisan Vikas Patra is allowed, but only after a lock-in period of 30 months (or 2 years and 6 months). To withdraw, you must submit an application form, your original certificate, and identity proof to the post office from where you purchased the certificate.

What are the pros and cons of investing in Kisan Vikas Patra?

Investing in KVP has numerous benefits such as guaranteed returns, capital protection, low entry threshold, long tenure, compounding interest, easy liquidity, and the options for nomination and transferability. However, there are some drawbacks as well, including lower interest rates compared to other investment options, a long lock-in period that may not suit short-term needs, and the absence of tax benefits on investment or interest income. Also, there’s a potential risk of misuse for money laundering purposes.

How is the income generated from Kisan Vikas Patra taxed?

Interest earned from KVP is fully taxable under the head ‘Income from Other Sources’ as per your applicable tax slab. However, under section 80TTA of the Income Tax Act, interest earned up to Rs. 10,000 in a financial year from all savings bank accounts, including KVP, is exempted from taxable income.

Can I transfer my Kisan Vikas Patra certificate from one post office to another?

Indeed, you can transfer your KVP certificate between different post offices.. You will have to submit an application form with your original certificate and identity proof at the post office where you purchased the certificate. A new certificate will be issued from the post office where you wish to transfer it.

Can I secure a loan against my Kisan Vikas Patra certificate?

Yes, you can take a loan against your KVP certificate. Banks or other financial institutions may permit the certificate to be pledged as collateral. The loan amount and interest rate will depend on the lender’s policies and your credit profile.

What happens if I lose or damage my Kisan Vikas Patra certificate?

In case of loss or damage to your KVP certificate, you can apply for a duplicate certificate. This involves submitting an application form with a declaration of loss or damage, identity proof, and a nominal fee at the post office where you bought the certificate. A duplicate certificate will be issued after verification.

What if the certificate holder passes away before Kisan Vikas Patra reaches maturity?

In the event of the certificate holder’s demise before KVP matures, the amount will be paid out to the nominee or legal heir, as per the nomination feature available in the scheme. If no nomination was made, the amount will be paid to the legal heir, following the succession laws.

Is it possible to change the nominee or holder of my Kisan Vikas Patra certificate?

Yes, the nominee or holder of your KVP certificate can be changed by submitting an application form with your original certificate and identity proof at the post office where you bought the certificate. It is also possible to add or delete joint holders or guardians in the case of a minor or person of unsound mind.

Can I buy more than one Kisan Vikas Patra certificate?

Yes, an individual can purchase multiple KVP certificates as there is no restriction on the number of certificates that can be purchased. However, only one certificate can be bought in your name as a single account and one certificate in the name of a minor or person of unsound mind.

How can I check the status of my Kisan Vikas Patra certificate?

You can verify the status of your KVP certificate by visiting the post office where you bought it or by logging into India Post’s website or mobile app with your credentials. You may also use an online calculator to determine the maturity value and date of your KVP certificate.

What documents are required to buy a Kisan Vikas Patra certificate?

To purchase a KVP certificate, you will need to provide the following documents:
Application form (Form A)
Proof of identity (such as Aadhaar card, PAN card, voter ID card, passport, driving license, etc.)
Documents demonstrating residence include, but are not limited to, an Aadhaar card, passport, or a utility bill.
PAN card (for investments above Rs. 50,000)
Income proofs (for investments above Rs. 10 lakh)

What are some alternatives to Kisan Vikas Patra?

Some alternatives to KVP are Fixed Deposits (FDs), Public Provident Fund (PPF), and National Savings Certificate (NSC). FDs offer higher interest rates than KVP with various tenure options and tax benefits under section 80C of the Income Tax Act for deposits up to Rs. 1.5 lakh for 5 years. PPF has a tenure of 15 years and offers an interest rate of 7.1% per annum with tax benefits under section 80C on investment up to Rs. 1.5 lakh and tax-free interest income and maturity amount. NSC also offers tax benefits under section 80C on investment up to Rs. 1.5 lakh.

Leave a Reply

Your email address will not be published. Required fields are marked *