Kisan Vikas Patra KVP: Rules, Tenure and Interest Features

Features and Government Backing

First launched to encourage financial savings and capital accumulation among farmers and rural households, Kisan Vikas Patra is now open to all eligible resident Indian citizens. As a statutory small savings scheme, it carries complete sovereign backing, eliminating default risk.

The Ministry of Finance reviews and notifies interest rates and maturity doubling periods on a quarterly basis. Once a certificate is purchased, the interest rate and tenure in effect on the deposit date remain locked for the entire life of the investment.

• Capital Safety: Complete principal and return security mandated under statutory Central Government small savings rules.
• Fixed Maturity Tenure: Deposits double over a fixed tenure determined by the prevailing notified quarterly interest rate.
• Denomination Flexibility: Certificates are issued in flexible denominations starting from modest minimum thresholds without an upper ceiling.

Account Types and Eligibility Guidelines

Kisan Vikas Patra accounts can be opened by any adult resident Indian citizen in an individual capacity or jointly with family members. Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not eligible to invest under current small savings rules.

Investors can choose between single holder accounts, joint accounts (payable to either survivor or jointly to both), and accounts opened by legal guardians on behalf of minor children.

• Single Holder Account: Opened by an individual adult for self or on behalf of a minor ward.
• Joint A & Joint B Accounts: Joint accounts operated jointly by up to three adults, or payable to any of the surviving holders.
• Pledging Mechanism: KVP certificates can be officially pledged as security or collateral to obtain credit from commercial banks or co-operatives.

Premature Encashment and Tax Implications

Kisan Vikas Patra accounts feature a mandatory lock-in period (typically two years and six months from the date of deposit) before early encashment is permitted. Premature withdrawal before completion of full tenure is allowed under specified conditions, including court orders or death of the holder.

Interest accrued on KVP certificates is taxable under the head 'Income from Other Sources' in accordance with the investor's applicable income tax slab. There is no tax deduction at source (TDS), but no Section 80C deduction applies to the principal deposit.

• Lock-in Period: Premature withdrawal is permitted only after completing the mandatory lock-in period as prescribed in post office rules.
• Nomination Facility: Holders can designate or alter nominees at the time of account opening or during the active certificate tenure.
• Account Portability: KVP certificates can be easily transferred between different post office branches or designated bank branches nationwide.

Related on KisanPe

• Financial Literacy for Farmers →
• Kisan Credit Card Guide →
• Government Schemes →
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• PM-Kisan guide →
• Subsidy calculator →

Common questions

General guidance, not personal advice. For your farm, ask your local Krishi Vigyan Kendra or agriculture officer.