TAX on KVP intrest

POSTED BY RAJESH PAI ON April 12, 2012 4:28 pm COMMENTS (6)

Hi

I had purchased KVP (kisan vikas patra) 4 years back on my Wife name and few KVP’s on Children’s name
I want to know how the Tax treatment for the intrest earned on these KVP’
And also while filing IT return where and which ITR form we need to mention.

Thanks
Rajesh

6 replies on this article “TAX on KVP intrest”

  1. gautam says:

    Hi!
    My wife got kvp amount of rs @9l after maturity, in april’16.
    How much tax I have to pay.
    I and my wife was an nri.

    1. As per tax slabs only ?

  2. RAJESH PAI says:

    Hi Ashal/BanayanFA,

    Thanks for the reply

    I am salaried employee and dont have income from any other business or profession.

    I have income From salary + KVP intrest + FD intrest

    And I have MF equity and Debt for long term.

    Dont have home loan.

    And another question i want to ask is the KVP intrest income need to be considred every year or after Redeeming it ?

    And aso for Debt fund ,(E.g BSL dynamic bond, SBI dynamic bond )the intrest income need to be considred every year or after Redeeming it.

    I Know For Equity MF i.e after one year no tax.

    And if i need to pay Tax persanlly ,how do i need to pay it (procedere)

    Thanks
    rajesh

    1. Dear Rajesh, If you are in 10% or 20% tax slab, it’s advisable to declare your interest income every year from these FDs & KVPs & pay tax accordingly. In case of Debt funds, if you have invested in dividend schemes, the dividend in your hand is Tax free. For capital Gains at the time of sell either from Dividend option or from growth option, ‘ll be taxable based upon the holding period.

      For less than 1Y holding period, it’s STCG & it ‘ll be added to your income from all other sources & ‘ll be tax at your slab rate.

      For more than 1Y holding period, it’s LTCG & it ‘ll be taxed either @ 10.3% flat with out benefit of indexation or 20.6% after indexation. You have the option to chose which ever is favorable to you.

      Eq. funds if hold for more than 1Y are tax free.

      You can use your Netbanking facility (if you do have one) to pay your income tax dues on the above interests & capital gains.

      Thanks

      Ashal

  3. Dear Rajesh, although the investments are done in the name of wife & kids but the interest earned from these KVPs ‘ll be clubbed with your income under section 64 of Income Tax Act.

    The interest from KVPs ‘ll be taxable for you & you w’d have to declare this interest under the head INCOME FROM OTHER SOURCES.

    If you do have salary + home loan + interest, the applicable Income Tax Return form is ITR-1. In case you do have some Capital Gains also, the applicable form is ITR-2. I assume You are a salaried employer & no income from business or profession.

    Please intimate if you do have some income from business or profession. In that case, the ITR form ‘ll change.

    Thanks

    Ashal

  4. BanyanFA says:

    Tax on KVPs is treated as Income from Other Sources. It is added to other incomes such as Salary, House Property and taxed based upon your existing tax slab.

    So for example, if you have salary income of Rs. 200,000 and KVP Interest of Rs. 50,000. Then your total income will become Rs. 2,50,000. You would then be charged taxed based upon the normal tax slabs.

    Regards
    BFA

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