Union Budget 2023 was very good for senior citizens. In this, opportunities have been increased for them to earn regular income from risk-free investment. For this , changes have been made in Senior Citizen Savings Scheme ( SCSS ) and Post Office Monthly Income Scheme ( POMIS ).
The investment limit has been increased in both the schemes. A new scheme has been introduced for women. Its name is Mahila Samman Savings Certificates ( MSSC ). Finance Minister Nirmala Sitharaman announced this in the Union Budget on 1 February. Another scheme already exists for senior citizens. Its name is Pradhan Mantri Vaya Vandana Yojana ( PMVVY ).
All the schemes belong to the government
An elderly couple investing Rs 1.1 crore in these schemes can earn a monthly income of around Rs 70,500 per month. The special thing is that all these schemes belong to the government. That’s why there is no risk of sinking money in them. If a senior citizen wants regular income after retirement, then he can invest in them and lead a worry-free life.
The maximum limit for investment in SCSS has been increased to Rs 30 lakh. Earlier it was Rs 15 lakh. This means that now an elderly couple can invest up to Rs 60 lakh in this scheme. This scheme is available in India Post Office and Banks. Its duration is 5 years. After maturity, you can extend it for another three years. The government reviews its interest rate every quarter. Right now the interest rate in this scheme is 8 percent. Its payment is done every quarter.
The investment limit in POMIS has been increased to Rs 9 lakh. Earlier it was Rs 4.5 lakh. This means that an elderly couple can invest Rs 18 lakh in this scheme. Its interest rate is 7.1 percent per annum. Its payment is done every month. This scheme is also for five years. The special thing is that even such people who are not senior citizens can invest in this scheme.
MSSC is new scheme. This is for girls and women. Maximum Rs 2 lakh can be invested in this for 2 years. This scheme will mature in March 2025. Its interest rate is 7.5 percent. The details of this scheme are still awaited.
Now let’s talk about PMVVY. Up to Rs 15 lakh can be invested in this scheme. This is for senior citizens. LIC manages this scheme with a duration of 10 years. Its interest rate is 7.4 percent. An elderly couple can invest Rs 30 lakh together in this scheme.
In the above mentioned schemes the elderly couple will have to invest a total of Rs 1.1 crore.
Understand calculation like this
You will get a tax-deduction under Section 80C of the Income Tax Act for investing Rs 1.5 lakh in SCSS in a financial year. Debt Corporate Trainer Joydeep Sen said, “Small savings schemes are very easy to understand. Hence there is no scope for misselling.” Interest is paid quarterly in SCSS. The frequency of interest payment of MSSC has not been disclosed yet. In this calculation, we have assumed that the current interest rates will remain the same.
Be mindful of taxes and lock-in
Amol Joshi, Founder, Plan Rupi Investment Services, said that these schemes are good for those who want assured returns with safety of money. However, one thing needs to be kept in mind that you will have to pay tax on the income from these. Secondly, since investing in these schemes, your money gets locked till the maturity of the scheme. Therefore, you should have an emergency fund to meet the money requirement in between.
