Kisan Vikas Patra

Full form: KVP

Savings & Deposits

Kisan Vikas Patra (KVP) is a government savings scheme available at post offices and designated banks that doubles your investment in a defined period. Current rate (2024): 7.5% -- doubles in approximately 115 months (9 years 7 months). No tax benefit on investment but fully guaranteed.

In detail

KVP features:nMinimum: Rs 1,000. No maximum.nPurchased in denominations from post offices and banks.nTenure: defined by interest rate (currently 115 months at 7.5%)nPremature encashment: after 2.5 years (30 months), with reduced returnsnTransferable: can transfer to another person (with documentation)nNo TDS on maturitynnKVP vs other savings:nPPF: better (tax-free interest) but Rs 1.5L annual limitnFD: comparable, but FD interest taxednKVP: interest taxable at maturity (or accrual, whichever earlier) but no TDSnnIDEAL FOR: investors who want guaranteed doubling with no upper investment limit

Formula

Doubling period = 72 / Interest rate (approximately)nAt 7.5%: doubles in approximately 9.6 yearsnMaturity value = Investment x 2 (fixed, by design)

Real-life example

🇮🇳 India example

Ramesh invests Rs 5L in KVP at 7.5% (115 months). Maturity: Rs 10L after 9 years 7 months. No TDS deducted. He adds interest income to ITR annually (as income accrues, even if not received). At 20% tax bracket: tax liability Rs 1L over 9 years = net Rs 9L realised. Better than FD (which gets TDS deducted and needs 15G filing).

Frequently asked questions

Is KVP a good investment? ▼

Good for guaranteed returns with no upper limit. PPF is better if you can stay within Rs 1.5L/year (tax-free, same EEE status). KVP is better when you want to invest more than Rs 1.5L in a guaranteed government scheme -- no limit. Combine: max PPF first, then park additional amounts in KVP.