Definition: The Kisan Vikas Patra is a government small saving scheme offered by the department of posts, which guarantees that the amount invested gets doubled in 110 months, i.e. 9 years and 2 months.
Kisan Vikas Patra is a saving certificate that comes in the denominations of Rs.1000, Rs.5,000, Rs.10,000 and Rs.50,000. These certificates are backed by the government of India, which means a fixed rate of interest is paid to the subscriber. These certificates can be purchased from any post office and specified branches of the nationalized banks, by making payment in either cash/cheque/ pay order/ DD, depending on the convenience of the subscriber.
Thus, the purpose of Kisan Vikas Patra scheme is to mobilize the savings of the small investors. The word “Kisan” in the scheme doesn’t mean that only farmers can invest in this scheme, rather any individual who is a resident of India can invest in these saving certificates. But, however, the investments made under this scheme are used by the government of India in the welfare schemes of the farmers. The following are the main features of Kisan Vikas Patra:
- Any individual, who is a citizen of India can invest under this scheme. The certificate can be bought by an adult in his own name, or on the behalf of the minor. Also, a trust and two adults can jointly purchase the savings certificate.
- The business entity such as a company or institute cannot invest under this scheme. Also, the NRIs, HUF, are not eligible to make an investment in these saving certificates.
- The minimum amount that can be invested under this scheme is Rs 1,000. However, there is no maximum limit of investment.
- The amount under this scheme gets doubled in 110 moths (9 years and 2 months) which means that a subscriber will get a return of 7.8% annually. The amount deposited can be withdrawn after 100 months, i.e. 8 years and 4 months.
- The subscriber can encash his certificate after two and half months from the date of issue and the amount to be paid depends on the period for which the scheme is held. The premature encashment of the certificate is not permissible except under the condition of holder’s death, or forfeiture by pledge or on the order of the court of law.
- The amount invested in Kisan Vikas Patra cannot be claimed for tax deductions under Section 80 C. The interest amount is fully taxable as income and the tax shall be levied as per the slab rates. Also, the TDS 10% is deducted from interest, but however the withdrawals are exempted from TDS upon maturity.
Note: The Kisan Vikas Patra scheme was discontinued in Dec 2011 due to the fear of money laundering. But, was re-launched in 2014 as the small investors were finding difficult to mobilize their small savings.