KVP post office scheme: From interest rate to tax implications, learn all about a savings scheme that doubles money in 120 months

Post office KVP: Did you know that Kisan Vikas Patra, a government-backed savings scheme, doubles the invested money over a span of 10 years? A KVP account, set up in a post office or select branches of PSU banks such as SBI and PNB, requires minimum investment of Rs 1,000 with no upper limit, and offers an interest rate of 7.2 per cent compounded annually, according to India Post's website, indiapost.gov.in. The amount of money parked in this government-backed savings scheme doubles in 120 months, according to India Post — which has more than 1,55,000 branches across the country. 

Here's a lowdown on the Kisan Vikas Patra (KVP) savings scheme certificates, including eligibility, interest rate, maturity period and minimum investment:

KVP post office scheme: Interest rate Jan-Mar 2023

Currently, investment in a post office KVP account yields a return of 7.2 per cent, compounded annually. Just like every other small savings scheme, the interest rate of KVP is reviewed on a quarterly basis and any changes announced at the end of each quarter. 

In December 2022, the interest rate as well as the maturity period applicable to Kisan Vikas Patra savings certificates were revised for a second straight quarter after nine back-to-back quarters of no change. The KVP scheme gave a return of seven per cent with a maturity period of 123 months in the quarter ended December 2022. For the previous three months, the interest rate was 6.9 per cent with a maturity period of 124 months.

KVP post office scheme: Interest rate history

How money grows in KVP savings scheme

Can you guess the amount of money you earn over time through KVP investments?

Here's a chart showing the estimated return at the end of each year in a KVP account with an investment of Rs 1 lakh:

KVP post office scheme: Eligibility

A KVP account can be set up singly or jointly (up to three individuals allowed) by individuals aged 18 years and above. The account can also be set up by a guardian in favour of a minor aged 10 years and above.

KVP post office scheme: Minimum investment

Eligible individuals can invest a minimum of Rs 1,000 in the Kisan Vikas Patra scheme with no upper limit. Any amount above 1,000 in multiples of 100 is permissable under the government-backed small savings scheme. 

KVP post office scheme: Lock-in period

Investment in a Kisan Vikas Patra scheme is locked in for a period of two years and six months from the date of deposit, according to the post office website. However, a premature closure is allowed in certain circumstances, such as death of an account holder, forfeiture by a Gazette officer pledgee or order by court. 

Can you get a loan against KVP?

Investment in KVP certificates can be used as collateral to avail a secured loan. 

Is KVP scheme taxable?

Yes. KVP returns are taxable, though post-maturity withdrawal is exempt from TDS. Learn about TDS and TCS

KVP post office scheme: Account transfer 

A Kisan Vikas Scheme account can be transferred from one person to another strictly under the following conditions:

• death of account holder (to a nominee or a joint holder)
• order by court
• pledging of account 

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