Kisan Vikas Patra is taxable on redemption. What does that mean? Does it mean that I wll get the whole maturity amount without any tax cuts and then I will have to pay the tax? Or does it mean tax will be cut when I redeem my KVP?
- Lyndon D Silva
The interest earned on Kisan Vikas Patra (KVP) doesn't enjoy any tax exemptions. The interest earned from it is taxed as per the Income Tax slab applicable to the investor on redemption. That means an investor in the highest tax slab will pay 30 per cent tax on the returns from KVP. Also, 10 per cent of the interest earned would be deducted as tax deducted at source (TDS).