Pradhan Mantri Vaya Vandana Yojana (PMVVY) and Senior Citizen Savings Scheme (SCSS) are preferable fixed income options for the elderly. The central government supports both programs and they offer better long-term returns compared to other safe options.
But if seniors have to choose one of the two, which one to choose?
SCSS offers rates of 7.4% and the maximum amount a senior can invest is Rs15 lakh. Payment takes place quarterly.
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The interest rates in PMVVY depend on the frequency of payment, whether the individual chooses a monthly, quarterly, semi-annual or annual pension.
PMVVY is structured in such a way that the maximum annual pension should be Rs1.11 lakh. If retirees opt for a monthly payment, the maximum pension they receive is Rs 9,250, and they will need to invest Rs 15 lakh.
The maximum annual payment is Rs1.11 lakh, and for this, the elderly must invest Rs1 449 086. The rate is between 7.4% and 7.66%, depending on the frequency of payment.
Both plans are intended for people 60 years of age and over. SCSS offers age relaxation in some cases. For example, retired employees over 55 and under 60 can invest in it, provided the investment is made within one month of receiving the retirement benefits.
The maximum tenure for SCSS is five years and for PMVVY it is 10 years. In both cases, accounts can be closed before maturity. In SCSS, the elderly must pay a penalty for the pre-closure. In PMVVY, a senior gets 98% of the purchase price.
The most important difference between the two is the tax benefit. SCSS are eligible for the deduction under section 80C. No tax deduction is available under the PMVVY. The PMVVY payment is also taxable. Interest income received from SCSS is eligible for tax deduction under section 80TTB.
According to the section, a senior can get a deduction of Rs 50,000 on interest income from term deposits (from eligible banks).
In most aspects, the SCSS scores are higher than PMVVY. However, if you want a monthly payment, the latter is preferable.
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