Kisan Vikas Patra is one of several guaranteed returns savings schemes. In 1988, the Indian Postal Department launched this scheme. I consider this scheme a great savings plan because it enables people to make investments. The main goal of the KVP scheme is to encourage farmers to put money aside for the future. So let’s just get started with how to calculate income tax on Kisan Vikas Patra.
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The KVP's interest rate is fixed at 6.90%. The funds are continuously reinvested and restored to the principle each year because they are multiplied yearly. Each quarter, the rates are announced, and the maturity period can alter in response to the rate. But, after you invest, the rates will not alter for you during the term. Both the deposit and the interest that the KVP generates are taxed equally. Your taxable income is increased by the interest received on the KVP, and your tax rate is then applied. KVP has a lock-in term of 30 months, which is important to know.
For example:
Let's use an example to better explain how interest is computed. Let's say you put Rs. 1 lakh into a KVP plan with a 6.90% yearly return. The interest will be Rs 6,900 at the conclusion of the first year. Your income is increased by this interest payment of Rs 6,900, and it is taxed to reflect your tax bracket. Due to the multiplying nature of interest, your principal at the start of the second year would be Rs 1,06,900. You make Rs. 7,376 in your second year. At the beginning of the second year, you have a balance of Rs. 1,14,276 after adding this to the Rs. 1,06,900 from the first year.
The scheme's leftover time is spent in a similar way. The period being 10 years and 4 months, the interest is just computed for the final four months, totalling Rs 4,383 after 10 years. Your original investment of Rs. 1 lakh will effectively grow to Rs. 2 lakh at maturity as a result.
You can now calculate the income tax on the scheme with this guide about how to calculate income tax on Kisan Vikas Patra.
Read More: How to calculate HRA in income tax? How to calculate depreciation as per the income tax act? How to calculate taxable income? How to calculate interest on an income tax refund?Your Feedback Matters! How was this Answer?
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How to calculate income tax on Kisan Vikas Patra?
Sujay
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2 Year
2022-09-14T21:10:16+00:00 2022-09-14T21:10:17+00:00Comment
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