PM Vaya Vandhana Scheme

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

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Blog Introduction

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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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