Let us see about Kisan Vikas Patra investment scheme in India below in detailed.
Kisan Vikas Patra (KVP) is a government-backed savings certificate scheme in India, launched in 1988 and reintroduced in 2014 by the National Savings Institute, offering secure, long-term investment that doubles the principal amount over approximately 115 months (9 years and 7 months), with a 7.5% annual interest rate for Q4 FY 2025-26 (compounded yearly), and no tax benefits on interest—interest is taxable as per the investor’s slab. Designed for risk-averse investors across all ages and employment statuses, it provides capital protection, post-lock-in transferability, and is perfect for goals like child’s education or retirement planning without market risks.
Where Should I Apply for a KVP Account(Certificate)?
Purchase KVP certificates easily at these authorized locations with simple KYC documents (Aadhaar, PAN, photo, address proof).
- Post Offices: All head and sub-post offices across India, ideal for rural access, cash deposits accepted.
- Nationalized Banks: SBI, PNB, Bank of Baroda, Central Bank, Union Bank—any branch.
- Scheduled Commercial Banks: HDFC, ICICI, Axis, Kotak, Yes Bank designated branches.
- Online via Net Banking: Select bank portals using Aadhaar eKYC for instant purchase (no branch visit).
Documents Required: Application form, PAN, Aadhaar, 2 photos, nominee details.
Deposit Methods: Cash/cheque at branch, NEFT/UPI/online transfer, passbook or certificate issued for tracking.
Guardian can purchase for minors, transfer certificates between post offices/banks anytime.
Eligibility Criteria
KVP welcomes nearly all Indian residents, regardless of age, job, or income, for inclusive family savings.
- Kids (Minors under 18): Parents/legal guardians purchase and operate, child can encash at 18 (PAN of parent/guardian).
- Youth/Adults (18+): Students, employed, self-employed, homemakers all qualify (PAN card is must).
- Unemployed: Jobless youth, homemakers, or gap-year individuals—no salary proof needed (PAN card is must).
- Senior Citizens (60+): No age cap, ideal for retirees (PAN card is must).
No limit on number of certificates per PAN, can buy multiple for self or family.
Who is Not Eligible
Restrictions ensure focus on resident individuals.
- NRIs: Cannot purchase new certificates, existing ones can be held till maturity.
- Foreign Citizens/PIO/OCI: Unless Indian resident.
- Institutions: Trusts, societies, companies, or firms cannot purchase (only individuals).
Joint purchase allowed up to three adults, but primarily individual.
Example
In a family of 6—Father (PAN: ABCDE1234F), Mother (PAN: FGHIJ5678K), and 4 kids (ages 3, 6, 9, 12)—no PAN-based annual limit applies, unlike PPF, so each can invest any amount starting from ₹1,000 with no upper cap.
Key Rule: No combined limit per PAN—invest as much as desired across personal or family certificates (min ₹1,000 per certificate).
If father has money to invest 10,000 at once he can get 1 KVP certificate for ₹10,000 at that time. Again after 1 year if he want to invest more then he need to invest min ₹1000 to maximum amount he can, by creating another KVP certificate. So each time he will get new KVP certificate. He can have any number of certificates(no limit). Each investment gives him a new KVP certificate.
Father buys ₹1,00,000 worth (₹10,000 x 10 certificates)(or)(₹50,000 x 2 certificates)(Denominations of certificates available in 1k, 5k,10k and max 50k)
Mother buys ₹1,00,000 worth (same).
Kids’ certificates via guardians: Flexible amounts.
There is no rule to share equally, they can invest any amount as they like with no yearly max (min ₹1,000 per certificate to max unlimited).
Key Features
Interest Rate: 7.5% p.a. for Q4 FY 2025-26, reviewed quarterly, fixed at purchase, compounded annually.
Tenure: Approximately 115 months to double investment (e.g., ₹1 lakh becomes ₹2 lakh)(Tax will be deducted for extra 1lakh maturity amount).
How Interest Works in KVP
Interest Rate: Set by government quarterly, current ~7.5% p.a., fixed for the certificate’s life.
Compounding Frequency: Interest compounds annually till maturity.
Calculation Basis: Simple doubling guaranteed, no monthly lowest balance rule.
Crediting: Full maturity value paid at end of tenure.
Taxation: Interest taxable as “Income from Other Sources”; no EEE benefits.
Impact of Purchase Timing: Rate locked at buy date, unaffected by later changes.
No Risk: Returns guaranteed by government, ensuring principal safety with doubling growth.
How to calculate?
Calculate using KVP calculator.
Example 1: Full ₹1 Lakh at Start (2 KVP certificates of 50,000 each) (Lump sum—Doubles fully).
Total tenure: 115 months.
Result: Maturity ₹2 lakhs (Principal ₹1L + Interest ₹1L).
Example 2: Split ₹1 Lakh (₹10,000 x ₹10 KVP certificates)(10 KVP certificates of 10,000 each).
Total tenure: 115 months.
Result: Maturity ₹2 lakhs (same doubling).
Loans, Encashment & Transfer (Flexibility)
Loans from KVP
When? Anytime after 2 years 6 months lock-in.
How much? Up to 60-90% as collateral at banks.
Repay? As per bank terms, with interest.
Example: Bought ₹1 lakh in 2024. By 2027, pledge for ₹60,000 loan.
Encashment from KVP
When? After 115 months maturity (or premature post 2.5 years with reduced value).
How much? Full maturity amount.
Limit: No partial encashment per certificate.
Example: ₹1 lakh bought April 2024 matures ~Nov 2033 with ₹2 lakhs.
Extension After Maturity
Maturity: After ~115 months.
Options:
Without further action: Encash full amount.
No extension: Unlike PPF, it’s a one-time certificate, buy new for continuity.
Transfer: Allowed post-lock-in to family or others.
Example: Matures 2033, encash and reinvest in new KVP.
Common Mistakes & Penalties (Avoid these)
Lost Certificate: Penalty for duplicate, but traceable via passbook.
Wrong Denomination: Buy in multiples of ₹1,000, ₹5,000 etc.
Ignoring Rates: Check current before purchase as fixed.
KVP Example (₹1.5 lakh per year for 9.58 years at 7.5%, but since no limit, scaled to match PPF example tenure approx).
let us see an example of 1.5L investment at once. And net maturity amount after 115 months tenure.
| Metric | Value (₹) |
|---|---|
| Principal | 1,50,000 |
| Maturity (~115 months) | 3,00,000 |
| Total Interest | 1,50,000 (taxable) |
| Tax (30% slab) | 45,000 |
| Net After Tax | 2,55,000 |
Final Totals
Total Investment: ₹1.5L (scaled).
Maturity Value: ~₹3L.
Interest Earned: ₹1.5L (taxable). No Sec 80C savings.
Net Value after tax deduction – 2,55,000.
Tax will be applied to whom tax deductions apply, others without tax deductions range can happily have this full maturity amount without any further deduction.
Who pays tax on interest? All slabs apply post TDS if >₹40,000/year.
Clear Tax Table by Annual Income
| Annual Income (₹) | Regime | Tax on ₹3L Interest | Tax Amount (₹) | Net After Tax (₹) | Keeps Full Maturity? |
|---|---|---|---|---|---|
| Up to 3L | Old/New | 0% (exempt) | 0 | 6L | Yes (₹0 tax) |
| 3L – 7L | Old | 5% on excess | ~12,000 | 5.88L | Yes, pays low tax |
| Up to 12L | New | 0% (rebate) | 0 | 6L | Yes (₹0 tax) |
| 7L – 10L | Old | 20% marginal | ~45,000 | 5.55L | Yes, pays moderate |
| 10L – 12L+ | Old | 30% marginal | ~90,000 | 5.1L | Yes, pays ~30% |
| Above 15L | New | 30% + cess | ~93,000 | 5.07L | Yes, pays ~30% |
This is all about KVP investment scheme in India.
