Mumbai: With the objective to raise savings in the country, the government on Tuesday relaunched Kisan Vikas Patra (KVP), an instrument which will provide trusted option of investment to poor and keep them off ponzi schemes. The new policy promises to double your money in just 100 months.
“In the last 2-3 years, savings rate in country has declined from a record high of 36.8% to below 30% due to slowdown in the economy. It is, therefore, necessary to encourage people to save more,” Finance Minister Arun Jaitley said during the launch of the revamped KVP.
KVP would serve two purposes, he said, adding, one it would help poor gullible investors to channelise their savings towards trusted government scheme instead of some ponzi schemes, where hard earned savings disappears.
“Secondly, there is an urgent need to raise savings in the country…these savings are then used for nation building. Such saving instrument, not only earn interest but help in development of the country,” he added.
Talking about the features of the instrument, the Finance Minister said this simple product would be a bearer instrument without name of the holder in the first phase. KVP is available in the denomination of Rs 1,000, 5,000, 10,000 and 50,000.
KVP, that has got no upper ceiling for investment, can be encashed after a lock-in period of 30 months.
Initially, the certificates will be sold through post offices, but the same will soon be made available to the investing public through designated branches of nationalised banks, Jaitley said. However, savers would not get any tax benefit for their investment in KVP.
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Things you should know about KVP
Any citizen of India can invest in KVP in his name, or on behalf of a minor. A trust is also eligible to invest in KVP. Two adults can jointly buy KVP.
The certificates can be issued in single or joint names and can be transferred from one person to any other person.
KVP can be transfer from one post office to another anywhere in India and of nomination will be available.
One can avail loans on KVP from the banks and in other case where security is required to be deposited.
Investor can encash his certificates after the lock-in period of 2 years and 6 months.
There are no tax benefits since interest accrued on KVP is taxable. The only KVP Tax benefit is that there is no Wealth Tax liable on Kisan Vikas Patra.
KVP has complete exemption from Wealth-Tax. Also, Tax is not Deducted at Source (TDS); one has to pay tax on the interest accrued.
Investment can be made in denomination of Rs. 1000, 5000, 10,000 and 50,000.There is no upper ceiling on investment.
KVP comes with a maturity of eight years and four months.
Business entities, such as a company or institutions, NRIs or HUF (Hindu Undivided Family) are also not eligible to invest in KVP.