Difference Between Kisan Vikas Patra (KVP) & Public Provident Fund (PPF)

There are a lot of post office saving schemes offered by post office in India to the people having variety of investment needs. This set of financial instruments encourages saving and provide financial security to the people of India.

As these Post Office schemes are backed by the government, they are safe and reliable investment avenues for the individuals. Post offices in India offer their services to the people through a vast network of over 1.55 lakh post offices and around 5.70 lakh employees.

Two important post office saving schemes offered by post office in India are Kisan Vikas Patra (KVP) and Public Provident Fund (PPF). Both offer investment benefits but they differ in objective of investment. Let us check out major differences between Post Office KVP and Post Office PPF in order to make proper investment decision.

Basis for DifferenceKisan Vikas Patra (KVP)Public Provident Fund (PPF)
PurposeKVP is a post office certificate scheme which doubles a one time investment in a certain period of timePPF is a long-term investment scheme which offers high and guaranteed returns
Interest Rate (p.a.)7.50% p.a. compounded annually7.10% p.a. compounded annually
Minimum InvestmentRs.1000, in multiples of 100 thereafterRs.500 in one financial year
Maximum InvestmentNo limitRs.1.50 lakhs in one financial year
EligibilityIndividuals including minorsIndividuals including minors
Tenure115 months i.e. 9 years and 5 months15 Years
Tax on interest earnedTaxable as per your tax slabTax Free
Tax ImplicationDoes not qualify for the 80C deductions. However, no TDS will be made from the KVP maturity proceedsQualifies for deduction under section 80C of Income Tax Act
  • Loan against KVP certificate is available
  • KVP interest rate is reviewed every quarter by the Government of India
  • If you do not withdraw the amount on maturity, it will continue to accrue interest until you withdraw the amount
  • A person cannot open a joint account
  • One person can have only one account in his name
  • Can be extended in the blocks of 5 years, if you wish
  • Loan facility is available
  • Contributions made to PPF Account, the interest earned on the PPF account and the maturity proceeds of the PPF account are all tax exempted under Section 80C of Income Tax

Traits of KVP: The certificates of KVP are available in denominations Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. KVP interest rates are set and reviewed by the government of India on a quarterly basis. Interest income received by the scheme is completely taxable. KVP deposits can be encashed prematurely but only after 2 years & 6 months (30 months) from the date of issue of the KVP. Unlimited number of KVP accounts can be held by an individual with a minimum deposit of Rs.1000 and then in multiples of Rs.100.

Key characteristics of PPF: PPF is an excellent investment option for people uncomfortable with taking risks as it offers guaranteed and risk-free returns. Investments under PPF can be either made in a lump sum or in a maximum of 12 instalments per financial year. Investment over Rs.1.50 lakhs in one financial year will not be given any interest. Opening of PPF account in joint names is not allowed. Partial withdrawal in PPF amount is allowed from the seventh financial year onwards.

Post Office Investment Options

Serial NumberInvestment OptionRate of Interest (p.a.)
1Post Office Savings Account4% payable annually
2Post Office Recurring Deposit6.70% per annum compounded quarterly
3Post Office Monthly Income Scheme (MIS)7​.4​% per annum payable monthly
4Post Office Time Deposit (POTD)1yr:6.9%, 2yr:7.0%, 3yr:7.1% & 5yr:7.5%
5Kisan Vikas Patra (KVP)7.5% compounded annually
6Public Provident Fund (PPF)7.10% compounded annually
7Sukanya Samriddhi Yojana (SSY)8.2​​​% compounded annually
8National Savings Certificate (NSC)7.70% compounded annually
9Senior Citizen Savings Scheme (SCSS)8.20% payable quarterly
10Mahila Samman Savings Certificate (MSSC)7.50% compounded quarterly