PMVVY Vs Senior Citizen Saving Scheme- Which is better investment for you?

PMVVY and Senior citizen Saving Scheme
PMVVY and Senior citizen Saving Scheme

PMVVY Vs Senior citizen Saving Scheme are the two golden scheme for senior citizens in India. Both PMVVY (Pradhan Mantri Vaya Vandana Yojana) & Senior Citizen Saving Scheme (SCSS) provide risk free, safe and better returns to senior citizens in India.

This article will bring out the best of each scheme.

Both PMVVY & Senior citizen saving scheme both are 100% safe govt. scheme schemes. Senior citizen aged 60 or above can invest in PMVVY and SCSS .The maximum investment limit in each scheme is Rs 15 lac.

 These schemes offer various flexibilities to the senior citizens in India. Both superior schemes offer regular income/pension to senior citizens but little difference in features and benefits. 

PMVVY Vs SCSS- Which is better investment for you?

There are many basic difference between PMVVY and SCSS. Let’s discuss each point one by one. Later we will also discuss the key difference.

Who is offering the scheme?

  • PMVVY: This scheme is offered by LIC of India. One can purchase it online and offline from LIC of India.
  • SCSS: It is offered by post offices, few private banks, and many other PSU banks. You can invest money either offline mode or online, as you wish.

Read more:

How To Open PMVVY Scheme Online

Who can purchase

  • PMVVY: Any Indian Citizen who is age 60 and above can purchase the scheme.
  • SCSS   : Any Indian Citizen who is age 60 and above can purchase the scheme.
  • Special cases in case of SCSS:
  • An investor Who has attained the age of 55 years or more but less than 60 years, and who has retired on superannuation or otherwise (Account has to be opened by such individual within one month of the date of receipt of the retirement benefits).
  • The retired personnel of Defence Services (excluding Civilian Defence Employees) shall be eligible to open an account under this Scheme on attaining the age of fifty years, subject to the fulfilment of other specified conditions.
  • Source : https://www.icicibank.com/Personal-Banking/investments/senior-citizens/eligibility.page?#toptitle

Duration of Investment PMVVY Vs Senior Citizen Saving Scheme(SCSS)

  • PMVVY : Investment time is for 10 years. Rate of interest is fixed (at the time of buying) for 10 long years. 
  • It will not change for you for 10 long years.
  • However, the interest rate may change each time you purchase a new scheme.
  • SCSS: Investment time is for 5 years. Whatever rate is fixed at the time of purchase will remain unchanged during 5 long years.
Feature PMVVYSCSS
Investment ( Scheme) Duration 10 Years 5 Years
Will Interest rate remain fixed or change during investment duration No changeNo Change
PMVVY Vs SCSS – Duration of investment

Amount of deposit

  • PMVVY: You can deposit Rs 15 lac in one name.
  • SCSS:    You can deposit Rs 15  lac in one name.

Tax Benefit U/S 80 C:

  • PMVVY: You will not get any deduction U/S 80 C in PMVVY.
  • SCSS: You can claim a deduction of Rs 1.5 lac in the deposition year U/S 80 C in SCSS.

Mode of Pension:

  • PMVVY: You can choose between monthly, quarterly, half-yearly or yearly mode. You can choose frequency as per your convenience.
  • SCSS: Only quarterly mode is available in senior citizen saving scheme. 
  • Pension dates are 31 March, 30 September, 30 June, 31 December. If you have deposited prior to three months, even then dates are fixed for the pension.
PMVVY VS SCSS

Can I take Loan?

  • PMVVY: You can take a loan after completion of 3 years.

 You can take a loan of 75% amount of the initial purchase price. The loan is available on the money you have paid initially to buy the policy.                 

You have to pay the loan interest @10% per annum and the loan is recovered from your pension amount.  In the case of the demise of the policyholder, the loan amount is recovered from the purchase price. 

  • SCSS:  No such facility is available in SCSS.

Can I Surrender and take money back

  • PMVVY: In case of critical illness of you or spouse,you can surrender and take money back, but at 2% discount. 
  • If you had deposited Rs 10 lakh initially you will be able to get 9.8 lakh.
  • SCSS:  No special condition to withdraw but the different amount will be released on the basis of your invested time:

After 1 year: 98.5% of your money (initially deposited amount) After 2 Year: 99% of your money (initially deposited amount).

PMVVY Vs SCSS – Interest rate

PMVVY interest rate 2022
PMVVY interest rate 2022

PMVVY Vs SCSS – Pension Amount

PMVVY Vs SCSS Pension pension 2022
PMVVY Vs SCSS pension 2022

PMVVY Vs Senior Citizen Saving Scheme – Taxation

  • tax calculation is only for illustration purposes. Please consult with your Accountant/Financial Advisor before jumping to any conclusion.

Frequently asked questions:

Can I purchase both schemes together? Can I take both SCSS and PMVVY?

Yes, one can purchase both the scheme together. Thus one can invest maximum of 15 lac in SCSS and 15 lac in PMVVY also.

If husband and wife both want to deposit in the scheme?

Since you can purchase SCSS and PMVVY together. You can deposit Rs 30 lakh in both schemes in one name.  

Therefore, you can deposit Rs 15 lakh in each scheme and your wife/husband can also deposit Rs 15 lakh in each scheme. In total you can deposit a maximum of Rs 60 lakh in both schemes in your name and your spouse name. 

How many accounts can be opened?

You can open any number of account but the money deposition limit is Rs 15 lac in each scheme. 

What I will get at maturity?

You will get maturity amount (purchase price i.e. the money you had deposited initially)along with remaining interest. 

If spouse age is less than 60 years, then can money be deposited in his/her name?

No, minimum age should be 60, but can be deposited if one has retired on superannuation or from defense services in case of SCSS.  In PMVVY, there is no such relaxation. 

Is interest fixed in SCSS and PMVVY or will it keep on changing with change in interest rate announced?

Interest rate will be fixed at the time of purchase only. Interest rate will not change if you continue the same scheme until its duration come to an end. 

Will interest rate change if I purchase it again on maturity?

Yes, at that time, whatever prevailing rate of interest will be there, you will get that rate of interest. 

Will TDS be deducted from PMVVY and SCSS?

PMVVY :  TDS is not deducted from the interest amount. You are liable to pay tax yourself. The interest amount will be added to your income and taxed as per your income tax slab rate. SCSS: TDS is deducted if interest amount is more than Rs 50000 in a Financial Year. Interest amount from bank, FD and post office scheme will be taken into account for Rs 50000 limit. 10% TDS is deducted @10%. 

Do I have to pay tax, if I have no income other than PMVVY and SCSS?

As combined together interest will not be more than Rs 2.5 lakh, which is below basic exemption amount, so no tax will be deducted from your part. But you should file zero tax even if your income is well below the threshold amount. 

In case of SCSS, for how many years I will get tax benefit u/s 80 C?

SCSS offers tax deduction u/s 80 C in the deposition year only and that too of Rs 1.5 lakh only. Say if you have deposited in 2018-19, then you will get an exemption for 2018-19 only and not after it. 

Do I need to file ITR?

Yes, you should. 

Do I get a tax benefit in extension year in the case of SCSS?

You do not get tax benefit in SCSS for the old amount, however, you get a tax deduction if you deposit a new amount in extension years. 

If money withdrawn prematurely, what about tax benefit?

Principal amount and interest will be added to your income and taxed as per your income tax slab rate. 

Is my money safe in PMVVY and SCSS?

Yes, absolutely both the scheme is govt. schemes, so no worries. 

  • If Money withdrawn in SCSS after 1 year or later than 1.5%/1% deduction is from interest income or investment amount?

The penalty of 1.5%/1% will be deducted from the investment amount.

What is the last date to purchase PMVVY?

The scheme is open for purchase till 31st March 2023.

Which of all banks SCSS is available?

Given below is the list of banks that of the scheme:

  • ICICI Bank
  • Vijaya Bank
  • Union Bank Of India
  • UCO Bank
  • Syndicate Bank
  • Indian Bank
  • Punjab National Bank
  • IDBI Bank
  • Indian Overseas Bank
  • State Bank Of India
  • Dena Bank
  • Central Bank of India
  • Canara Bank
  • Bank of India
  • Bank of Baroda
  • Bank of Maharashtra
  • Allahabad Bank

Can I change the pension option later in the case of PMVVY?

No, you have to choose the option in the initial stage only. Once chosen options can not be changed or altered. 

Is it good to invest in PMVVY?

PMVVY is a safe and secure scheme to invest in. One can purchase PMVVY from LIC of India either offline or online. In this low return era from fixed income products such as FD, PMVVY is offering 7.4% interest rate.

Additionally you get money back after completion of 10 years.

Can I invest 15 lac each in SCSS and PMVVY?

One can invest 15 lac each in PMVVY and Senior citizen Saving Scheme. But at any point of time, the investment amount should not exceed 15 lac. For example if you invested Rs 15 lac this year then next year you cannot invest 15 lac again in the scheme.

Now in another instance, if you deposit 5 lac this year then next year or any other time you can deposit 10 lac.

Conclusion: 

PMVVY and Senior citizen Saving Scheme both are very good schemes to invest for regular income. Before investing one should ensure not to withdraw the money before the duration of scheme.

From a taxation and liquidity point of view SCSS scores over PMVVY. You get tax exemption of 1.5 lac U/S 80 C in case of SCSS, while there is not tax deduction U/S 80 C in PMVVY.

Additionally interest income upto 50k exempt in case of SCSS. While the entire pension amount is taxable in nature. The rate of interest remain same for entire duration.

On Key

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