Kisan Vikas Patra (KVP), a one-time investment that provides guaranteed returns, was initially launched primarily for the farmers. Now it's open to everyone. Do note that any investment done in KVP isn't eligible for Income Tax deduction and the interest earned is Taxable.
The KVP Scheme might be a viable investment option for risk-averse investors. However, if compared with NSC, PPF, and other few Small Savings Schemes, KVP doesn't appear to be a very attractive investment alternative.
Some of the disadvantages of KVP (Kisan Vikas Patra) are:
This scheme is not eligible for tax benefits under Section 80C. You will not get any tax deductions on your interests or returns.
NRIs and the Hindu Undivided Families (HUFs) are not eligible to purchase a KVP certificate.
A few bank Fixed Deposits offer better benefits than KVP.
When it comes to investment schemes and increasing your money, there are much better options available in the market.
The maturity period is longer when compared to the NSC scheme.
KVP's lock-in period is somewhat on the high as compared to the usual Fixed Deposits that can be broken at any time with a little penalty.
At the withdrawal time, funds will get transferred to the concern person’s postal saving account. No cash payments allowed at the withdrawal time.
For small investors, the Kisan Vikas Patra (KVP) might serve as a better investment option because of its secured interest income and liquidity. Although there are no tax benefits for the investments made, it'll still be a wise option to invest in this scheme for its higher returns.