Jan 21, 2015 02:30 PM IST | Source: Moneycontrol.com

Why you should invest in Kisan Vikas Patra

KVP would double your money in 100 months or 8 Yrs 4 months. This is a good saving scheme for those who are looking for high safety and want to double their money.

Why you should invest in Kisan Vikas Patra

Last week our Finance Minister, Mr. Arun Jaitley has launched New Kisan Vikas Patra (KVP). Kisan Vikas Patra is a small saving scheme which aims to double your money in 100 months or 8 Yrs 4 months. Financial Advisors started giving negative views on Kisan Vikas Patra. Is Kisan Vikas Patra a good saving scheme?

Quick glance about the features of Newly launched Kisan Vikas Patra
KVP would double your money in 100 months or 8 Yrs 4 months. This is a good saving scheme for those who are looking for high safety and want to double their money.

Interest rate is 8.7% per annum

KVP’s are available in the denominations of Rs 1000, Rs 5000, Rs 10000, Rs 50000.

There is no maximum limit on investment in Kisan Vikas Patra.

KVP’s have a lock-in period of 2 Yrs 6 months. You can encash them after lock-in period and need not wait till maturity. Beyond this 30 month lock-in period, investors can redeem in every 6 month interval.

Any individual or joint individuals can buy these Kisan Vikas Patra’s.

These KVP’s can be transferred from one person to another any number of times.
Currently these are issued at all Post Offices in India. Later they would be issued through Nationalized banks in India. You can transfer KVP’s from one Post Office to another within India.

You can pledge these KVP’s as security for taking any bank loans.

The amount invested in KVP’s are not eligible for tax rebate u/s 80C. The interest amount is also fully taxable.

You need to compile with KYC norms applicable to Small Saving Schemes to invest in this scheme. You need not furnish PAN details.

How Kisan Vikas Patra score high compared to other small saving schemes?
Investors can invest in this safe investment scheme instead of investing in some Ponzi schemes.

These KVP’s offer higher liquidity to investors who can sell them after 2.5 Years. National Saving Certificates (NSC) on the other hand have 5 year maturity period. PPF has 15 year maturity period.

Kisan Vikas Patra comes with attractive interest rate of 8.7% per annum. NSC Offers 8.5% and Post Office Term deposit offers 8.4% interest rates. PPF on the other hand, offers 8.75%, however, this would get changed every year.

You can invest any amount in Kisan Vikas Patra. You can gift such KVP’s to minor children, friends and relatives. However, it would attract gift tax for them.

You can transfer such KVP’s from one post office to another. Currently, if you buy NSC from one post office, it would be difficult if you transfer or move to another city.

Who should invest in Kisan Vikas Patra?
These KVP’s are designed for low risk taking individuals who are looking for safety of their investment and aiming for high interest rates. However, individuals who are looking for tax savings or willing to park money for the long term have better alternatives like National Saving Certificates, Public Provident Fund and tax saving bank FD Schemes. If you are looking for saving money, you can simply opt for bank Fixed deposits which offers 9% interest rates. Many banks even offer higher interest rates.

Concluding remarks: Kisan Vikas Patra’s aims to double your money in 100 months along with providing higher liquidity. However, several negative factors make KVP un-attractive. These are most suitable for rural investors who might not have a bank account, PAN card, etc. who can simply invest in these schemes and get high returns.

The author of this article is founder of Myinvestmentideas.com. He can be reached at suresh@myinvestmentideas.com for any clarifications.

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