Senior citizens will be able to invest an additional Rs 15 lakh in the Senior Citizen Savings Scheme ( SCSS ) from April 1. In the budget presented on February 1, Finance Minister Nirmala Sitharaman has announced to increase the investment limit in this scheme from Rs 15 lakh to Rs 30 lakh.
This is good news for senior citizens. But, it seems that on the one hand the government has increased the investment limit in SCSS and on the other hand it has ended the investment opportunity in the scheme. The government has not announced the continuation of Pradhan Mantri Vaya Vandana Yojana ( PMVVY ). The scheme will close on March 31, 2023.
Government has given from one hand and taken from the other.
PMVVY is a government scheme for retired people. Investing up to Rs 15 lakh in this can earn almost tax-free returns. If the government does not issue a notification to continue this scheme, it means that you will not be able to invest in this scheme after March 31, 2023. It seems that the government has cleared the way for senior citizens to increase investment in SCSS on the one hand and has closed the way for investment in PMVVY on the other.
Investor benefits from allowing more investment in SCSS
Experts say that even if the government has given something with one hand and taken it with the other hand, it is beneficial for the investors (senior citizens). Let us understand how it is beneficial. The interest rate in Senior Citizens Savings Scheme (SCSS) is 8% per annum. In comparison, the annual return in PMVVY is 7.4 per cent. Interest is paid quarterly in SCSS. PMVVY has a monthly interest payment option. One can invest in SCSS only for five years. But, there is a chance to invest in PMVVY for 10 years.
SCSS is more attractive than PMVVY
But, in terms of tax, SCSS is more beneficial for senior citizens. Under Section 80C of the Income Tax Act, 1961, tax deduction can be availed by investing Rs 1.5 lakh annually in SCSS. There is no facility to claim tax deduction under section 80C on investment in PMVVY. Second, the advantage is in case of premature withdrawal. Premature withdrawal is easy in SCSS. After opening the account, you can withdraw money from it. You will not get the benefit of interest or have to pay penalty.
In PMVVY, if you close the account before one year, then you will not get interest. If interest has been paid to you, it will be deducted from the principal amount. However, premature withdrawal is allowed in PMVVY under certain circumstances. The investor can withdraw his money from this scheme for the treatment of himself or his wife.
You can take advantage of both the schemes
If you want to take advantage of both the schemes, you can do so. For this you have to invest in PMVVY before March 31, 2023. After that you can also invest an additional Rs 15 lakh in SCSS on or after 1st April. Thus you stand a chance to earn assured returns on a total safe investment of Rs 45 lakhs.
