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Abhishek Chakravarti
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Abhishek is a financial writer with over 6 years of experience in the BFSI sector. Prior to his current stint with Axis Max Life Insurance, he has worked with leading fintech startups. He specializes in writing about taxation and various investment products like ULIPs, retirement plans, guaranteed investment plans, mutual funds etc.
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Sahil Rawal is a digital & brand management specialist with over 10 years of experience in Financial Services Industry. Life insurance professional with expertise in digital marketing strategy, website content marketing and brand communication designed to increase brand awareness, drive engagement & sales.
The current interest rate offered by the Kisan Vikas Patra Scheme in 2024 is 7.5% p.a. The current KVP interest rate will be in effect till September 2022. This means, an investment made into the KVP scheme will double 115 months i.e. 9 years 7 months.
Being a government-backed scheme, the fixed interest rate of KVP is liable to change periodically. The KVP interest rate is reviewed by the Ministry of Finance on a quarterly basis and this can change the maturity period for the investment. KVP matures when your original investment is doubled. A higher interest rate on Kisan Vikas Patra investment means a shorter maturity period, while a lower interest rate means a longer maturity period.
The below table illustrates how KVP interest rates have changed since April 2016 and impact of the interest rate changes on the maturity period of the investment.
Year | Kisan Vikas Patra Interest Rate % | KVP Maturity Period |
1 April 2016 to 30 Sept.2016 |
| 110 months |
1 Oct2016 to 31 March 2017 | 7.7
| 112 months |
1 April 2017 to 30 June 2017 |
| 113 months |
1 July 2017 to 31 Dec 2017 | 7.5
| 115 months |
1 Jan 2018 to 30 Sept 2018 | 7.3
| 118 months |
1 Oct 2018 to 30 June 2019 | 7.7
| 112 months |
1 July 2019 to 31 March 2020 | 7.6
| 113 months |
1 April 2020 to 30 September 2022 | 6.9
| 124 months |
1 Oct 2022 to 31 December 2022 | 7.0
| 123 months |
1 January 2023 to 31 March 2023 | 7.2
| 120 months |
1 April 2023 to 31 December 2024 | 7.5
| 115 months |
From the above-mentioned KVP interest rate chart, it can be established that the Kisan Vikas Patra Interest Rate 2022 has been 6.9%. With the decrease of Kisan Vikas Patra Interest rate, the tenure has been currently extended to 124 months, which was 113 months prior to April 2020. The Kisan Vikas Patra Interest Rate has not changed since April 2020.
Kisan Vikas Patra offers a guaranteed interest rate with yearly compounding. So, the interest earned at the end of the first year is added the original investment and becomes the principal for the second year. Similarly, the KVP interest earned in the second year is added to the principal of the second year and becomes the principal for the third year. This calculation can be represented by the following KVP Interest calculation formula:
A = P (1+r)t
In the above formula for calculating KVP interest,
A= Maturity Amount, P = Principal Invested, r= KVP interest rate per annum, t = period of investment
This process of annual compounding is repeated till the original investment made by the investor in Kisan Vikas Patra is doubled. The interest earned from KVP is only paid out at maturity and not during the interim period. So, you can easily use a compound interest calculator to know how much interest you will earn each year based on the prevailing KVP interest rate.
The principal amount invested in Kisan Vikas Patra does not offer any tax benefits unlike other popular government savings scheme like National Savings Certificate or Public Provident Fund. Additionally, unlike tax-free PPF interest, the interest earned from KVP is also completely taxable in the hands of the investor. So, the KVP interest earned is paid out at maturity, it is added to the investor’s income for the financial year under the head “Income from Other Sources” and taxed as per the applicable income tax slab rate of the investor.
Also Read: What is NSC Interest Rate in 2024?
While the Kisan Vikas Patra interest rate is the same regardless of type of account, there are three types of KVP accounts an investor can choose from:
While a single-holder account is suitable for an adult as well as an adult on behalf of a minor. A minor can invest in KVP under the guidance of a guardian or parent. As for Joint A and Joint B types of accounts, the KVP account certificate is issued to no more than three individuals.
The Kisan Vikas Patra Scheme is available as an investment option to all individuals. Investors can benefit from the guaranteed returns offered by the KVP interest rate if they meet the following eligibility criteria:
ARN No: Sept22/Bg/23
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