Kisan Vikas Patra is a scheme that encourages people to save small amounts of money. The Government of India regulates and administers it through the Department of Posts. KVP is an excellent savings scheme for individuals who want to invest in risk-free fixed-income vehicles. The scheme is available through post offices and a few bank branches. Kisan Vikas Patra calculator can help you in calculating the returns you get on your investment during a fixed period .
How Does the KVP Maturity Calculator Work?
Fixed-income investments provide much-needed stability to your investment portfolio. Kisan Vikas Patra (KVP) is an old and popular option among investors from the various investment options available. It is a completely safe investment because the Central Government backs it. As the name implies, the funds collected through this scheme are used for farmer welfare and development, representing a critical pillar in our country’s development. This article goes over the various features and benefits of Kisan Vikas Patra and how you can use the KVP calculator. The Kisan Vikas Patra calculator operates on the compounding principle, with the return formula being the same as the compound interest formula.
A = p(1+r/n) ^(nt)
The variables stand for the following descriptions.
A= Maturity amount
P= Principal amount or the initial amount
r= Rate of interest
t= Time period of investment
n= Number of times interest compounds within the time period
Consider the following example before delving into the various calculation metrics available in a KVP calculator. This will help you understand the metrics in the Kisan Vikas Patra calculator discussed in the following section.
Individuals must enter values into the KVP calculator that correspond to the following calculation metrics:
| Metrics for Calculation | Details |
| Amount Invested | The amount invested in this scheme is referred to as the investment amount. |
| Date of Investment | The investment date is the date on which an individual makes an investment in the KVP scheme. |
The maturity amount is computed after entering both data into the specified fields of a KVP interest calculator. Following that, the user would be shown the maturity amount, maturity date, and total amount of interest on a KVP interest calculator year-wise.
You should note that in the case of Kisan Vikas Patra calculator, interest is compounded annually. The current interest rate on offer is 6.9 per cent. KVP does not have a set time frame. With the current interest rate, the maturity date will be in 124 months for the KVP interest rate calculator.
Kisan Vikas Patra (KVP) Calculator & Interest Rate Chart
As you may already be aware, the Indian government originally created the Kisan Vikas Patra (KVP) in 1988. The programme itself was a big success, but the Indian authorities discovered that many people were exploiting it to launder money. Therefore, the Indian government established a committee headed by Shayamla Gopinath. Based on the committee’s report, the government closed this programme in 2011. However, In 2014, this programme was reintroduced by the administration. The KVP calculator is a tool that you can use to find out the expected return from your investment in the Kisan Vikas Patra scheme. This calculator will help you plan your future expenses using the return rates of the scheme.
You only need to give two pieces of information to determine the maturity amount and date of the Kisan Vikas Patra (KVP)
- Enter the size of your investment.
- Date of your investment
Here’s an illustration to help you understand better: On November 12, 2016, Mr. X invested 10,000 rupees in the Kisan Vikas Patra scheme. In this instance, the investment would be for 10,000, with the date of the investment being “12/11/2016.” You can simply conduct the computation after filling out this information in the online Kisan Vikas Patra calculator.
How Does KVP Encashment Work?
Investors can withdraw KVPs at the Post Office where they are originally from. But this can only be done if the officer in charge of the bank or post office agrees and provides proof. In case they don’t then investor can withdraw it at any other post office as well. A KVP interest rate calculator is one of the easiest ways for you to calculate the exact returns on your investment on maturity. This calculator is available online and can help you determine the maturity amount based on the current scheme tenure and return rates.
Benefits of KVP
- Assured Returns – Regardless of the market fluctuations, if a person has invested in KVP, they will receive a guaranteed sum at the end of maturity.
- Compounding Interest – The interest accrued is compounded yearly, ensuring higher returns on the principal sum invested.
- Loan Facility – Your KVP certificate may be used as security or collateral when applying for secured loans. Such loans have a relatively lower interest rate.
How to Calculate Amount Paid on Premature KVP Encashment?
There is a chance of premature KVP encashment in the following circumstances:
- The holder’s death, or if there are joint holders, the death of either holder.
- Upon forfeiture of a government official with a gazette’s pledge.
The amount that must be paid upon premature KVP encashment varies on how long the plan was held. For instance, the figure below shows how much would need to be paid if a KVP certificate worth Rs. 1,000 were to be prematurely encashed between 1 July 2019 and 31 March 2020 with an interest rate of 7.6% at the time.
| Period of Holding Investmnet | Amount to be Paid |
| > 1 year | 1,000 (No interest earned) |
| 3 -3.5 years | 1,173 |
| 3.5-4 years | 1,211 |
| 4-4.5 years | 1,251 |
| 4.5-5 years | 1,292 |
How to Redeem Your KVP Investment?
You can redeem your KVP investment by visiting your nearest post office branch but you can also redeem it at any other post office in the nation. If you redeem your KVP from a different post office than where it is from then you must present the identity slip. Otherwise, the post office where it was purchased would need to confirm it.
Apart from easy redeeming process, KVP investment has many other benefits as well. They are:
- Long-Term Savings – Investors can purchase the Kisan Vikas Patra certificates for as little as Rs. 1000. There is no upper limit to the amount you can invest. The investment value will be twice as much in 124 months, or ten years and four months. The Kisan Vikas Patra certificate itself declares the value the holder will receive upon completion of the term.
- Fixed Interest Rate – Depending on the number of years invested in Kisan Vikas patra at the time of purchase, the effective interest rate changes. 6.9% annually is the current interest rate. for the quarter beginning on July 1, 2021, and ending on September 30, 2021, compounded annually.
- Physical Investment Instruments – The Kisan Vikas Patra saving scheme is available in the form of a printed scheme certificate that can be saved in physical form. This certificate has no depository form and cannot be traded on the secondary market.
- Fixed Lock-in Period – This scheme has a fixed lock-in period of two and a half years. If you have any financial emergency, you can cash this scheme early only after 2.5 years from the date of issuance.
- Collateral for Loan: When applying for a loan, Investors can use the Kisan Vikas Patra certificate as collateral. Before issuing you a loan, most banks and financial institutions will accept this certificate as collateral.
Also Read: Investment Plan for 3 Years
How Much Interest Can You Earn From KVP at Maturity?
KVP takes 9 years, 2 months to reach maturity. Interest is due on the amount owing even if the subscriber receives the money at maturity. The amount of interest received is equal to the interest on savings accounts. Currently, the Kisan Vikas Patra (KVP) scheme has an interest rate of 6.9 percent. The Indian government created this scheme and they also adjust the interest rate every three months. So, in a sense, it is variable.
The central government determines the rate of returns on KVP investment annually. The amount of money people invest in this scheme will be twice as much at the end of the term. The government updates the return rates on a regular basis to ensure that the administration can keep its promise. Currently, for the 2022 financial year, the rate of return is 6.9 per cent with a tenure of 124 months which equates to 10 years and 4 months. It is important to note that the returns of KVP are taxable. To know more about it, you can use the KVP tax calculator or refer to the table below.
| Investment from | Investment To | Interest Rate | Maturity Period |
| 01-04-2020 | 30-09-2020 | 6.90% | 10 Years 4 Months |
| 01-07-2019 | 31-03-2020 | 7.60% | 9 Years 5 Months |
| 01-10-2019 | 31-12-2018 | 7.70% | 9 Years 4 Months |
| 01-01-2019 | 30-09-2018 | 7.30% | 9 Years 10 Months |
| 01-07-2017 | 31-12-2017 | 7.50% | 9 Years 7 Months |
| 01-04-2017 | 31-06-2017 | 7.60% | 9 Years 5 Months |
| 01-10-2016 | 31-03-2017 | 7.70% | 9 Years 4 Months |
| 01-04-2016 | 30-09-2016 | 7.80% | 9 Years 2 Months |
What are the Tax Rules for Kisan Vikas Patra?
There are no Section 80C tax deductions available for the amount people invest in KVP. Every year, this scheme’s interest income is subject to taxation as “Income from Other Sources.” You might decide to use an accrual basis to compute and pay tax on your interest income each year. The investors can pay taxes on the aggregated interest income they receive at the conclusion of the five years. The cost of investing in this scheme is not deductible. The maturity funds of this scheme are not subject to Tax Deduction at Source (TDS). There are no Section 80C tax deductions available for the amount people invest in KVP. Even interest earned on KVP is exempt from income tax, and interest is subject to a TDS deduction of 10%.
Conclusion
The Kisan Vikas Patra scheme is popular among low and middle income groups generally coming from semi-urban and rural areas. This scheme is one of the best return investment schemes, which comes with virtually no risks. You also get a lot of benefits by investing in this scheme because investors can use the certificate as collateral for loans. Overall, if you are new to investments and want to save some money for your future, the Kisan Vikas Patra scheme can be a great solution.
Also Read: Best Investment Plan for 1 Year
FAQs:
When using a KVP calculator, users must enter their initial investment amount and date in order to receive the results for their maturity value. 1.
In order to determine the applicable interest rate of an invest, the calculator needs the size of the investment and the date of your investment.
There are advantages and disadvantages to both these types of investment. Bank FDs can be closed before maturity at any time by paying a small penalty and you can take loans against FDs. Whereas, KVP is a good option for investment for those who carry out transactions through the post office or do not have a bank account at all. Also consider the tax benefits for the investment options before investing.
Yes, you can but it will fall under premature withdrawal. To take advantage of KVP premature withdrawal, the account holder must notify the Post Office in writing, after which the money will be disbursed.
After the scheme’s tenure is over, the invested amount is doubled. As an illustration, if someone invests Rs. 10,000, at maturity they will receive Rs. 20,000.
Both are long-term investments with comparable interest rates. Under Section 80C, which is not present in KVP, the investment as well as interest reinvested until maturity may be adjusted against taxable income earned.
Yes, No tax exemptions apply to interest collected on Kisan Vikas Patra (KVP). When redeemed, the interest is taxed according to the investor’s applicable income tax bracket.
No, KVPs are not tax free. The interest earned on KIsan Vikas Patra yojana is subject to taxes.
Read more about Post Office PPF.
