PM Vaya Vandhana Scheme

What Is PMVVS? | PM Vaya Vandhana Scheme | 1 Best Guaranteed returns for senior Citizens of India

Table of Contents

Blog Introduction

Hello Friends, Welcome to my Blog Investinfy.com the best financial blogs where you will be able to read about the end to end information on many investment schemes and financial topics. In this Blog post we will be focusing on PM Vaya Vandhana Scheme.

Generally when we want to invest money on any investment scheme , we always asks our friends and relatives that where we can invest ? and they suggests the investment schemes which they like most. Then we invest as per their suggestions, that is good as we consider them as our well wisher , But here I want to mention one thing, if we know end to end information of each investment schemes at least it will help us to understand if that investment scheme is good for us or not.

Hence it is better to have a complete idea about each investment scheme where we invest. Therefor this blog will help you to know end to end information of many Indian investment schemes available right Infront of you.

In this blog post I will be explaining my analysis on  PM Vaya Vandhana Scheme. This will be a complete guide on PM Vaya Vandhana Scheme. Please read till end of the blog post to know the complete information about this PM Vaya Vandhana Scheme. Lets get started.

What is PM Vaya Vandhana Scheme?

It is a guaranteed pension scheme exclusively for senior citizens. This scheme provides immediate pension. It means that if you deposit the money today, you will receive pension from next month onwards.

History Of PM Vaya Vandhana Scheme (PMVVS)

This scheme was launched on 04-May-2017 with the aim of providing long term, guaranteed and immediate pension to senior citizens. When the scheme was launched in May-2017, senior citizens were offered a time period of 1 year (till May-2018) to deposit in this scheme. But, in Budget 2018, it was announced that senior citizens can deposit in this scheme till 31-March-2020. In May-2020, the Government has announced that senior citizens can deposit in this scheme till 31-March-2023. So, you can deposit in this scheme anytime between 04-May-2017 and 31-March-2023. This scheme is operated by LIC of India.

How Does PM Vaya Vandhana Scheme Work?

  • Deposit a lump sum amount and open an account.
  • Choose your desired pension frequency (monthly, quarterly, half-yearly or yearly).
  • You will receive pension on a regular basis for 10 years as per your chosen pension frequency.
  • At the end of 10 years, you will get your deposit amount back if you are alive.
  • If the account holder die during the term of 10 years, then the pension will be stopped immediately. account holder’s deposit amount will be given to your nominees or legal heirs

Features of PM Vaya Vandhana Scheme (PMVVS)

  • Scheme offered by the Government of India.
  • Scheme exclusively for senior citizens.
  • Safe investment option.
  • Guaranteed pension.
  • Various pension frequencies to choose as per your choice.
  • Peace of mind during retirement life.
  • No GST is charged.

Income Tax Benefits of PM Vaya Vandhana Scheme (PMVVS)

  • No Income tax benefits.
  • The deposit amount is not eligible for deduction under Section 80C of Income Tax Act.
  • The pension amount you receive in this scheme is taxable. You need to declare the pension amount under “Income from other sources” during tax returns and it will be taxed as per your income tax slabs.
  • There is no tax on the deposit amount when it is paid back to you at the end of the term or when it is paid to account holder’s nominees or legal heirs in case of account holder death.
  • TDS (Tax Deducted at Source) is not deducted in this scheme.

Who Can Open The PM Vaya Vandhana Scheme Account?

  • This scheme is exclusively for senior citizens. So, you should be at least 60 years of age to deposit in this scheme.
  • There is no upper limit on the age to enter in this scheme.

How to Open The Account?

  • This scheme is operated by LIC (Life Insurance Corporation) of India.
  • You can deposit in this scheme through online.
  • Through offline at LIC offices or through LIC agents

Last Date For Deposit in PM Vaya Vandhana Scheme

  • This scheme is a limited time offer scheme.
  • The last date to deposit in this scheme will be 31-March-2023.
  • Earlier, the last date to deposit in this scheme was 31-March-2020. But, in May-2020, the Government has extended the scheme for 3 more years and hence the last date to deposit in this scheme will be 31-March-2023.
  • So, you can deposit in this scheme anytime between 04-May-2017 and 31-March-2023.

Term

This scheme is for the period of 10 years.

Pension Frequency of PM Vaya Vandhana Scheme

In this scheme, you can choose to receive pension in one of the following modes.

  • Monthly
  • Quarterly
  • Half-yearly
  • Yearly

 The pension amount will be paid to you at the end of the chosen pension frequency. The following table describes when you will receive pension.

Pension FrequencyWhen will you get Pension?
 Monthly At the end of every month
 QuarterlyAt the end of every 3 months
Half-yearly At the end of every 6 months
 Yearly At the end of every year
Pension Frequency

Deposit Limit of PM Vaya Vandhana Scheme

The deposit amount varies based on your chosen pension frequency.

The following table lists the minimum and maximum deposit amount for various pension frequencies. 

Pension FrequencyMinimum Deposit Amount (Rs.)Maximum Deposit Amount (Rs.)
Monthly
1,62,162

15 Lakhs
Quarterly
1,61,074

14,89,933
Half-yearly1,59,57414,76,064
Yearly1,56,658
14,49,086
Deposit Limit

Note: Please note that the maximum deposit amount is per senior citizen. It means that you can have one or more accounts under this scheme. The total deposit amount of all the accounts should not exceed the maximum deposit amount for the chosen pension frequency.

For example, let us assume that you have 3 accounts under this scheme and you have chosen to receive quarterly pension. In this case, the total deposit amount of all the 3 accounts should not be more than Rs. 14,89,933.

In addition, if your spouse is also a senior citizen, then he or she can also invest a maximum of Rs. 15 Lakhs. So, you and your spouse can together invest a maximum of Rs. 30 Lakhs.

How Much Pension Can I Get from PM Vaya Vandhana Scheme ?

The pension amount varies based on the deposit amount and the chosen pension frequency.

The following table lists minimum and maximum pension amount for various pension frequencies.

Pension FrequencyMinimum Pension (Rs.)Maximum Pension (Rs.)
Monthly1,0009,250
Quarterly3,00027,750
Half-yearly6,00055,500
Yearly12,0001,11,000
Minimum and Maximum Pension

Interest Rates (%)

The interest rates offered in this scheme for various pension frequencies are given below. 

Pension FrequencyAnnual Interest Rate (%)
 Monthly 7.40%
 Quarterly7.45%
 Half-yearly 7.52%
 Yearly7.66%
Interest Rates

The interest rate (on the day of account opening) will remain the same throughout the tenure of 10 years. It will not change even if there are changes to the interest rate thereafter.

From May-2017 to 31-March-2020, the interest rate was 8% for the monthly pension frequency. But, in May-2020, the Government has announced some important changes to the interest rate of this scheme.

As per the announcement,

  • The interest rate will be revised every financial year .
  • The interest rate for the financial year 2020-21 will be 7.4% for the monthly pension.
  • The revised interest rate will be in line with the interest rate of Senior Citizens Savings Scheme (SCSS) upto a limit of 7.75%.

Pre-Mature Closure

Pre-mature closure option is allowed in this scheme.

You can leave this scheme in the middle of 10 years only in case of exceptional situations like you are in need of money for the treatment of critical diseases of yourself or your spouse.

But, there is a penalty for leaving the scheme before completing the term. The penalty amount is 2% of the deposit amount. If you leave pre-maturely, then 2% of the deposit amount will be deducted and you will get only 98% of the deposit amount back.

For example, if you deposit Rs. 10 Lakhs and you decide the leave the scheme after 3 years, then Rs. 20,000 will be deducted as penalty and you will get only Rs. 9.8 Lakhs back.

In case of Death of the account holder

  • If the account holder die during the term of 10 years, then the pension will be stopped immediately and the entire deposit amount will be given back to depositor’s nominees or legal heirs.
  • There is no exclusion in case of suicide of the depositor. So, even if if the commit suicide, the entire deposit amount will still be given to depositor’s nominees or legal heirs.

Loan Facility

  • Loan facility is available in this scheme after completion of 3 years.
  • The maximum loan amount that you can get is 75% of the deposit amount.
  • The interest rate (%) for the loan amount will be decided from time to time. For example, for the loans granted till 30-April-2018, the annual interest rate is 10% payable half-yearly.
  • The loan interest will be recovered from the pension amount. The outstanding loan amount will be recovered from the deposit amount at the time of leaving the scheme.

Free Look Period

  • After depositing in this scheme, if you are not happy with it, you can return the policy and get your entire deposit amount back. This is called free look period.
  • Free look period is 15 days from the date of receipt of the policy. If you deposited online, then the free look period is 30 days.

Nomination

Nomination facility is available in this scheme.

FAQ about PM Vaya Vandhana Scheme

Is The Pension Guaranteed from PM Vaya Vandhana Scheme

Yes. The pension amount is guaranteed for the entire term of 10 years.

Maturity Benefit of PM Vaya Vandhana Scheme

If you survive till the end of 10 years, then the deposit amount will be given back to you. You won’t get bonus in this scheme.

Is there any Extension period of PM Vaya Vandhana Scheme

Extension feature is not allowed in this scheme. It means that you can’t extend this scheme after the term of 10 years. You will need to close the account and get the deposit amount back.
If you want to deposit further, then you will need to open a new account with the new rules applicable at that point in time.

Is there any GST applicable for PM Vaya Vandhana Scheme

GST (Goods and Services Tax) is not charged in this scheme.

I am a NRI , can I Invest in PM Vaya Vandhana Scheme ?

No. NRI (Non Resident Indians) can’t invest in this scheme.

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Senior citizens savings scheme

What is Senior Citizens Savings Scheme | Best Senior Citizen Investment scheme | 1 Best Guaranteed Returns

Hello Friends, Welcome to my Blog Investinfy.com the best financial blogs where you will be able to read about the end to end information on many investment schemes and financial topics. In this Blog post we will be focusing on Senior Citizens Savings Scheme.

Generally when we want to invest money on any investment scheme , we always asks our friends and relatives that where we can invest ? and they suggests the investment schemes which they like most. Then we invest as per their suggestions, that is good as we consider them as our well wisher , But here I want to mention one thing, if we know end to end information of each investment schemes at least it will help us to understand if that investment scheme is good for us or not.

Hence it is better to have a complete idea about each investment scheme where we invest. Therefor this blog will help you to know end to end information of many Indian investment schemes available right Infront of you.

In this blog post I will be explaining my analysis on Senior Citizens Savings Scheme. This will be a complete guide on Senior Citizens Savings Scheme. Please read till end of the blog post to know the complete information about this Senior Citizens Savings Scheme. Lets get started.

Table of Contents

What is Senior Citizens Savings Scheme (SCSS)?

This scheme is exclusively for Senior Citizens (aged 60 years or more). This scheme provides regular income on a quarterly basis. If you are a retired person and having some lumpsum amount with you then this is the best and risk free saving scheme for you to earn a regular quarterly income for yourself.

How does Senior Citizens Savings Schemes works ?

  • You need to deposit a lump sum amount into your SCSS account.
  • Every Quarter means every 3 months you will start receiving the interest till the end of your tenure.
  • You will get back your deposited amount back at the end of your tenure.

Features of Senior Citizens Saving Scheme ?

  • This Scheme is exclusively for Senior Citizens of India only.
  • This scheme is Backed by the Government of India.
  • This scheme provides Guaranteed returns.
  • This scheme is a Safe investment option for eery senior citizens.
  • This scheme gives you a regular quarterly income.
  • You will have a peace of mind during your retirement life.
  • You will be also getting lots of income tax benefits.

Where do you open the SCSS account ?

Senior Citizen saving scheme account can be opened in

  • Post Office
  • Nationalized banks
  • Also in private sectors bank

Who can open the SCSS account ?

  • Only Indian residents can open the account. An individual of the age of 60 years or more can open the account.
  • An individual of the age of 55 years or more but less than 60 years and who has retired on superannuation or under VRS can also open account.
  • The retired personnel of Defence Services (excluding civilian Defence employees) of the age of 50 years or more can open the account.
  • Joint account can be opened with spouse only. First depositor in joint account is the investor.
  • A depositor can open more than one account either individually or jointly with spouse.
  • Any number of accounts can be opened. But, total investment in all the accounts should not exceed the maximum investment limit of Rs. 15 Lakhs.

What is the deposit limits of senior citizens savings scheme account?

  • Minimum deposit amount is Rs. 1,000.
  • Deposit amount should be in multiples of Rs. 1,000.
  • Maximum deposit limit is Rs. 15 Lakhs.

What is the maturity period of senior citizens savings scheme?

  • Maturity Period for this scheme is 5 Years.

Extension Period of SCSS

  • After maturity, the account can be extended for further 3 years.
  • Account can be extended within one year of maturity by giving application.
  • During the extension period, account can be closed at any time after one year of extension without any deduction.

What is the interest rate for senior citizens savings scheme ?

  • Current annual interest rate is 7.40%.
  • Interest amount is paid on a quarterly basis. That means interest is paid at the end of Calendar quarter (31st March, 30th June, 30th Sept and 31st December).
  • Interest rate (on the day of account opening) will remain the same throughout the tenure of SCSS. It will not change even if there are changes to the interest rate thereafter.

How will you receive the interest ?

You can receive quarterly interest in one of the following ways.

  • Quarterly interest can be credited into Savings Bank (SB) Account present in the same deposit office.
  • Quarterly interest of SCSS accounts present at CBS (Core Banking Solution) Post Offices can be credited in any Savings Bank (SB) Account present at any other CBS Post Offices.
  • Money order

Process for Premature Closure of SCSS account

  • If you close the account pre-maturely after 1 year, then 1.5% of the deposit amount will be deducted and you will receive the remaining amount.
  • If you close the account pre-maturely after 2 years, then 1% of the deposit amount will be deducted and you will receive the remaining amount.

Nomination Facility of Senior Citizens Savings scheme account

  • You can nominate either at the time of account opening or after opening the account but before maturity.

Income Tax Benefits of SCSS account

  • Investment made in SCSS are also eligible for tax deductions in the following manner.
  • The principal amount deposited in SCSS is eligible for a tax deduction of up to Rs. 1.5 Lakh per annum under section 80C of the Income Tax Act, 1961.
  • Interest on SCSS is taxable as per the tax slab applicable to the person. In case the interest amount earned is more than Rs. 50,000 for a fiscal year, Tax Deducted at Source (TDS) is applicable to the interest earned. This limit for TDS deduction on SCSS investments is applicable from AY 2020-21 onwards.
  • ICICI Bank
  • Bank of Baroda
  • State Bank of India
  • Canara Bank
  • Punjab National Bank
  • Union Bank of India
  • Vijaya Bank
  • UCO Bank
  • Bank of India
  • IDBI Bank

Interest Earnings Projection Table

Deposited AmountInterest Rates(%)Deposited Period in Years Quarterly interest pay out (INR)
5,00,0007.40%59,250
6,00,0007.40%511,100
7,00,0007.40%512,950
8,00,0007.40%514,800
9,00,0007.40%516,650
10,00,0007.40%518,500
11,00,0007.40%520,350
12,00,0007.40%522,200
13,00,0007.40%524,050
14,00,0007.40%525,900
15,00,0007.40%527,750
Interest Earnings Projection Table

FAQ About Senior Citizens Savings Scheme

What is the Compounding Frequency of Senior citizen saving scheme?

Compound interest is not applicable in this scheme. Simple interest calculation is followed in this scheme.

Is there any Account Transfer faciality available in Senior citizen saving scheme?

SCSS account can be transferred from one deposit office to another deposit office.

What is the eligibility criteria of joint senior citizen saving account?

The age of first depositor is supposed to be above 60 years. However, there is no age limit for the second applicant. The joint account can be opened only with the spouse. However, the entire amount in a joint account will be attributable only to the first account holder.

What is the maximum age of senior citizen saving account opening?

Any individual, above the age of 60, can open a Senior citizen savings account.

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RD

What is RD investment Scheme | Recurring Deposit | Complete Step By Step guide | 1 Best Guaranteed returns

Hello Friends, Welcome to my Blog Investinfy.com the best financial blogs where you will be able to read about the end to end information on many investment schemes and financial topics. In this Blog post we will be focusing on end to end information on RD Investment Scheme.

Generally when we want to invest money on any investment scheme , we always asks our friends and relatives that where we can invest ? and they suggests the investment schemes which they like most. Then we invest as per their suggestions, that is good as we consider them as our well wisher , But here I want to mention one thing, if we know end to end information of each investment schemes at least it will help us to understand if that investment scheme is good for us or not.

Hence it is better to have a complete idea about each investment scheme where we invest. Therefor this blog will help you to know end to end information of many Indian investment schemes available right Infront of you.

In this blog post I will be explaining my analysis on RD Investment scheme. This will be a complete guide on RD investment scheme. Please read till end of the blog post to know the complete information about this RD investment scheme. Lets get started.

Table of Contents

What is RD?

RD stands for Recurring Deposit. RD is savings scheme where you can deposit a fixed amount every month for the chosen tenure. In this saving scheme, the interest earned will be compounded on quarterly basis.

This scheme is suitable for those people who wants to save a small amount every month and then receive a big amount at the end of the tenure.

I called this saving scheme as piggie box saving scheme with guaranteed returns. Generally at home everyone will have some piggie box where they keep their small small amount and at the end of the year they can see a lump sum amount in the piggie box . This saving scheme is also same but here you will be saving in bank and your money will earn money for you in the form of interest. Hence what could be better then this.

This saving scheme will also help you to be financially disciplined that every month you will start saving some money.

How Does RD work?

  • Step 1: Choose the monthly Deposit amount you want invest.
  • Step 2 : Choose the tenure.
  • Step 3 : Deposit the fixed amount every month for the chosen tenure.
  • Step 4 : At the end of the tenure you will get the maturity amount ( Deposit Amount + Interest earned ).

Features

  • Safe Investment Option
  • Guaranteed returns
  • Quarterly compounded interest
  • Helps you to save small amount every month and creates the habit of regular savings.
  • Senior Citizens get extra interest rate compared to other customers
  • RD can be used as a security to get loan

Income Tax Benefits

Income Tax benefits will be same on both old and new tax systems. No Income tax benefits on the monthly deposit amount.

There is a TDS (Tax deducted at source) from bank if the interest received more than Rs. 40000 in a financial year. This is for ordinary citizens. The new TDS limit of Rs. 40000 is from 01-April-2019 onwards. Earlier the limit was Rs. 10000 .

For Senior citizens, TDS limit is Rs. 50000 from 1st April 2018 onwards. Earlier the limit was Rs. 10000 .

Bank will provide TDS certificate for the tax deducted.

Interest received is taxable. you need to declare the interest income under ” income from other sources” during your tax returns filing and pay the income tax as per your income tax slab.

Depending upon the term of Recurring Deposit, you can choose to pay the tax either on maturity or every financial year.

Who can open the account ?

  • Any resident individuals can open the individual account.
  • Joint account can be created by 2 or more individuals.

Deposit Amount

  • Minimum Monthly deposit is Rs. 100
  • No Limit on the maximum monthly deposit amount
  • Monthly deposit amount should be in multiples of Rs. 10
  • once you decide the monthly deposit amount , it can not be changed later on.

Penalty for Non-deposit

You need to pay the penalty charges if you do not deposit the specified amount for a any particular month. Penalty charge varies from bank to bank.

Term

  • Minimum terms – 6 months
  • Maximum terms – 10 years
  • Term should be in multiples of three months. for an example 6 months, 9 months, 12 months, 15 months and so on.
  • few banks offer terms up to 20 years.

Compounding frequency

Quarterly compounding frequency is followed in this scheme

RD Interest rate

Interest rate is same as the TDR and STDR (Fixed Deposit) for the tenure of Recurring Deposit. Interest rate on the day of your RD account opening will remain same throughout the tenure of Recurring Deposit. It will not change even if there are changes to the interest rate thereafter. the Interest rate varies from bank to bank. For more information about the FD interest rate read here

Interest Credit Method

You will receive interest amount upon maturity of the scheme along with the deposit amount.

Pre-Mature closure

Pre-mature closure rules will be the same as TDR and STDR (Fixed Deposit) accounts.

Premature Closure of RD is possible . But there will be a penalty for the pre-mature closure. The penalty amount is generally 1% of the interest earned. Interest will be payable for the duration for which the TDR was kept minus the penalty amount. The penalty amount may change from time to time.

Loan facility

Loan facility is available up to 90% of the account balance (deposit amount plus accrued interest) in RD account.

Nomination facility

Nomination facility is available for Recurring Deposit Investment scheme. You can either nominate at the time of account opening or after opening the account (but before maturity).

Recurring Deposit Saving Projection Table

Let us take an example and see how much we can save and earn by saving small small amount monthly for a specific period.

Period in yearsMonthly Deposited Amount in INRGeneral public Maturity Amount in INR (interest rate 5.40%)Senior citizen Maturity Amount in INR (interest rate 6.20%)
5 5000344850352163
510000689699704327
51500010345491056490
52000013793981408654
Recurring Deposit saving Projection Table

Conclusion

To conclude this saving scheme, this is very good saving scheme for those people who does not want to take risk for their money and wants to save money for their children education and other committed responsibilities like marriage and all.

As per my case study, when I asked many of the Govt officials like teacher , doctors, civil services official they have opted this saving scheme in this way.

  • Every month they deposit some amount into their recurring deposit account and after 2 to 3 years they withdraw a lump sum amount from the recurring deposit account and put it for fixed deposit. they continue to repeat this process and accumulate a good saving amount after 10 to 15 years.
  • This Accumulated amount they can spend for their children’s higher studies and marriage etc.
  • Also many people opt this savings scheme for short term goals like purchasing car, household furniture etc.

FAQ about RD saving scheme

Is it possible to transfer my RD account from one branch to another branch?

Yes RD accounts can be transferred from one branch to another branch without any extra cost.

I am a NRI can I open RD account ?

NRI (Non resident Indians ) can not open residential recurring deposits account. But they can open NRI recurring deposits accounts and it is a different scheme completely.

What will be the penalty if I close the RD account before maturity period?

The penalty amount is generally 1% of the interest earned.