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Thread: TDS on maturity for KVP

  1. #1
    NewBie
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    Default TDS on maturity for KVP

    I had invested in KVP (kisan vikas patra) around 2004 and they are soon going to mature.

    I am an NRI right now and wondering where can I deposit the maturity amount.
    Ideally I would like to invest the money to buy an apartment.


    Do I have to open a NRO account to deposit this? Will the bank deduct TDS and on the whole amount?



  2. #2
    Moderator Rahul's Avatar
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    Bank won't deduct any TDS on KVP amount. KVP money cannot be repatriated and hence will be required to be deposited in an NRO account. If you don't have the NRO account but have had an savings account than, your existing savings account will be required to be converted into an NRO account, further to which you can deposit the funds in the account.
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  3. #3
    NewBie
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    Oh cool. Thank you.
    Then i can just open a NRO account and deposit money in there.

    Just curious, how come there is no tax on the interest earned on KVP?

    Quote Originally Posted by Rahul View Post
    Bank won't deduct any TDS on KVP amount. KVP money cannot be repatriated and hence will be required to be deposited in an NRO account. If you don't have the NRO account but have had an savings account than, your existing savings account will be required to be converted into an NRO account, further to which you can deposit the funds in the account.

  4. #4
    NewBie
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    Nevermind, found the answer. Tax is payable on the interest earned however no TDS.

    Quote Originally Posted by sunny23m View Post
    Oh cool. Thank you.
    Then i can just open a NRO account and deposit money in there.

    Just curious, how come there is no tax on the interest earned on KVP?

  5. #5
    Super Moderator PolicyWala's Avatar
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    The interest earned on KVP is taxable in the same manner as interest income earned on bank FD. The KVP holder is not required to pay TDS (tax deducted at source) unlike a bank FD where interest income of Rs 10,000 or more attracts TDS.

  6. #6
    NewBie
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    What is the difference between NRE and NRO accounts?

  7. #7
    Moderator Rahul's Avatar
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    Quote Originally Posted by Shrikant_Inturi View Post
    What is the difference between NRE and NRO accounts?
    - NRE Account credits are funds deposited from out of India in permitted foreign currencies.
    - NRO Account permits credit of any legitimate dues in India of the account holder.
    |Jargon Buster|Before you post, please read the FAQ and the sticky posts on the board you wish to use.|Blog|


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