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Discussion > Income Tax > Tax queries >

Kisan Vikas Patra tax on Interest

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None

[ Scorecard : 58]
Posted On 25 December 2010 at 11:25 Report Abuse

I have purchase Kisan Vikas Patra woth 4 lacks on 15/4/2010.Do I have to show/liable for taxation, Interest of KVP for the financial year 2010-2011 ? If yes how do I calculate ? If not then in which financial year and what interest amount will be shown/liable for taxation ?


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Member (Account Deleted)
ARTICLE, CA-PCC

[ Scorecard : 7013]
Posted On 25 December 2010 at 14:40

 

Kisan Vikas Patra

Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar to bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8 years & 7 months. Some people have a misconception that only a farmer can invest money in Kisan Vikas Patra. However, it is absolutely false. Anyone wishing to invest money at safe places can go for Kisan Vikas Patra. 

How to Invest
One can invest in any head post office / sub-post office in cash, demand draft, or local cheques. You just have to walk into a post office, and meet a clerk looking after KVP issues. He will give you a form. You just have to fill the form and submit it with the desired amount. A KVP would be issued to you. However, be mindful of taking a few of photographs of yours with you. You would need them to put on the form. 

Who Can Invest
Kisan Vikas Patra can be purchased by the following:

  • An adult in his own name, or on behalf of a minor
  • A Trust
  • Two adults jointly

Tabs and Denominations
Kisan Vikas Patra are available in the denominations of Rs 100, Rs 500, Rs 1000, Rs 5000, Rs. 10,000 and Rs. 50,000. There is no maximum limit on purchase of KVPs. 

Withdrawal
Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law. 

Who is not Eligible

  • Commercial Companies and institutions are not eligible to purchase KVP.
  • NRIs and Hindu Undivided Families cannot purchase Kisan Vikas Patra.

Maturity

  • Facility of reinvestment on maturity.
  • Maturity proceeds which are not drawn are eligible for Post office Savings account interest for a maximum period of two years.

Salient Features

  • KVPs can be pledged as security against a loan to Banks/Govt. Institutions.
  • KVPs are transferable to any Post office in India.
  • KVPs can be transferable from one person to another person before maturity.
  • Nomination Facility is available in case of KVPs
  • Duplicate can be issued for lost, stolen, destroyed, mutilated and defaced KVPs

Tax Benefits
No income tax benefit is available under the Kisan Vikas Patra scheme. Interest income is taxable, however, the deposits are exempt from Tax Deduction at Source (TDS) at the time of withdrawal. KVP deposits are exempt from Wealth tax.



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Member (Account Deleted)
ARTICLE, CA-PCC

[ Scorecard : 7013]
Posted On 25 December 2010 at 14:46

KVP Interest Calculator
(Check out the 4th sheet in the attached XL file)



Attached File : 30 multiple caclulator.xls downloaded 1042 times

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Dario Dias
None

[ Scorecard : 58]
Posted On 27 December 2010 at 15:04

Originally posted by : Deep @ k Gupt/\

KVP Interest Calculator
(Check out the 4th sheet in the attached XL file)

Does it mean that I show 24000 as interest earned from kissan vikas patra for financial year 2010-2011? My yearly income is 2 lack 10 thousand, so my income would be 2,34,000.Is it ?




V.Natarajan
Retired

[ Scorecard : 21]
Posted On 23 February 2012 at 14:48

the investment of rs.10 lakhs in REC BONDS  shown in earlier returns got matured in 2010. out of above on 4.02.2010  i invested rs.5 lakhs in kvp. i did not show in my asst.ment year2010/11 and2011/12. i have now recd. letter from i.tax stating that they have recd. letter from post office abt. my investment.

kindlyclarify whether interest should be shown every year asst.ment or only at the time of maturity year (ie) in2018



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