The government has introduced the ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY)’ aimed at offering social security to seniors and safeguarding individuals aged 60 and above from potential declines in their interest earnings due to market uncertainties. This scheme ensures financial stability during old age by providing a guaranteed pension or return linked to the subscription amount, backed by government assurance to the Life Insurance Corporation of India (LIC).
- What is the Pradhan Mantri Vaya Vandana Yojana (PMVVY) Scheme?
- Eligibility criteria for PM Vaya Vandana Yojana
- Pradhan Mantri Vaya Vandana Yojana Interest Rate
- Minimum and Maximum Amount of Purchase price and Pension
- Benefits of Pradhan Mantri Vaya Vandana Yojana
- How to Register for the PMVVY Scheme?
- FAQs
What is the Pradhan Mantri Vaya Vandana Yojana (PMVVY) Scheme?
Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a retirement and pension scheme that is operated by LIC of India and backed by the government of India under the National Savings Scheme. This scheme is available to resident senior citizens (above the age of 60 years). Investors can invest a lump-sum amount in the scheme and receive guaranteed pension payments on a monthly, quarterly, semi-annually, or annual basis for a tenure of 10 years.
This scheme was formerly available from 4th March 2017 to 31st March 2020. However, according to a press announcement from the Government of India dated May 20, 2020, the benefit of this PMVVY Scheme has been extended for three more financial years i.e. till March 31, 2023.
Life Insurance Corporation is granted the primary right to run this scheme and one can get this pension plan from their official website or by visiting the branch.
Eligibility criteria for PM Vaya Vandana Yojana
Residential Individuals can invest in PM Vaya Vandana Yojana if they fall under the following eligibility criteria:
- Senior Citizen who is a resident individual above the age of 60 years.
- There is no maximum entry age for opting under this scheme.
- The tenure of the scheme is 10 years.
- The total purchase price under the PMVVY should not exceed INR 15 lakhs.
Note: It is important to take into account the size of the family while selecting the pension amount. The definition of a family here is a spouse and dependents like an unemployed son or an unmarried daughter who is not more than 25 years of age.
Pradhan Mantri Vaya Vandana Yojana Interest Rate
Pradhan Mantri Vaya Vandana Yojana Interest Rate keeps on fluctuating as the government revises the interest rate every year. Currently, the interest rate is as follows:
- Monthly pension payment: 7.4% p.a.
- Quarterly pension payment: 7.45% p.a.
- Half-yearly pension payment: 7.52% p.a.
- Yearly pension payment: 7.66% p.a.
Minimum and Maximum Amount of Purchase price and Pension
| Mode of Payment | Minimum Purchase Price (Installment or Investment) | Minimum Pension Amount against the Purchase Price | Maximum Purchase Price (Installment or Investment) | Maximum Pension Amount against the Purchase Price |
| Monthly | INR 1,56,658 | INR 1000 | INR 14,49,086 | INR 9,250 |
| Quarterly | INR 1,59,574 | INR 3000 | INR 14,76,064 | INR 27,750 |
| Semi-Annually | INR 1,61,074 | INR 6000 | INR 14,89,933 | INR 55,500 |
| Annually | INR 1,62,162 | INR 12000 | INR 15,00,000 | INR 1,11,000 |
Benefits of Pradhan Mantri Vaya Vandana Yojana
Investing in PM Vaya Vandana Yojana can have many positive outcomes, some of which are as follows:
Income Tax Benefits
A senior citizen who is investing in PMVVY is eligible to claim a deduction of up to INR 1,50,000 on the deposit amount under section 80C. However, the interest amount received is taxable as per the respective tax slabs applicable to the taxpayer.
Premature Withdrawals and Loan Facility
In case of emergencies for self and spouse, one can use the funds of this scheme and as per the rules, they will get 98% of the purchase price as a surrender value.
After completion of more than 3 years of this policy, one can also avail loan against the investment of the PMVVY scheme of up to 75% of the purchase price. Interest on the loan will be calculated from the pension payments based on the frequency of the loan payment. Moreover, on maturity or surrender, the outstanding loan will be recovered from its claim amount.
Maturity Benefit
Pradhan Mantri Vaya Vandana Yojana upon maturity of the tenure provides the entire purchase price in lump sum provided that the pensioner survives till the end of the completion of the policy. In case of the unprecedented death of the pensioner during the tenure of the policy, the nominee or the beneficiary can claim a complete purchase amount by submitting the relevant documents.
How to Register for the PMVVY Scheme?
An individual can register for PMVVY either online or offline. The following documents need to be submitted while applying for this pension scheme:
- Aadhaar Card
- PAN Card
- Details of the bank where the individual wishes the pension to be credited
Following are the steps to apply for PMVVY online:
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Visit the official website of the Life Insurance Corporation
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Navigate to the ‘Buy Policy Online’ section, and select Pradhan Mantri Vaya Vandana Yojana
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Now, click on button no. 842 for the ‘Buy Online’ option
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Now create an Access ID and add all the relevant details such as name, e-mail ID, mobile number, date of birth, and address. You will receive this 9-digit Access ID either by SMS at the registered mobile number or through email.
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Submit the Access ID and click on ‘Proceed’
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Lastly, select the appropriate pension plan under Pradhan Mantri Vaya Vandana Yojana, fill up the application form, and upload relevant documents. After successful submission, you will receive an acknowledgment number and policy number.
One can also visit the nearest LIC branch and fill out the application form and opt for PMVVY.
FAQs
Yes, an individual can invest in both of these schemes at the same time.
A policyholder can return the policy within 15 days if purchased offline and in 30 days if this policy is purchased online, from the date of issuance of the policy mentioning the reason for the disagreements. The amount to be reimbursed during the duration will be the purchase price paid by the policyholder after the deduction of Stamp Duty and pension paid if any.
The pension payment is initiated via NEFT or Aadhaar Enabled Payment System.
Hey @sushil_verma
There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.
Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA), conveyance, transport allowance, medical reimbursement, etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.
For eg,
Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.
The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).
Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).
As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.
Hey @Sharath_thomas , we have updated the content according to the appropriate assessment year. Thanks for the feedback.
No issues. You’re welcome!
Hey @shindeonkar95
In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.
However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.
Hope, it helps!
Hello,
Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?
There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?
I couldn’t find anything on this. Any help is appreciated.
Hello @Veejayy,
Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.
Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.
These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!
Also, interest earned on these bonds will be taxable.
Hope this helps!
Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total
Hey @Sheirsh_Saxena, yes, the investment amount needs to be added under 80C.