Investors in this scheme can’t get 80C deductions.
If the pensioner passes away during the policy’s term, the purchase sum is reimbursed and given to the nominee or the policyholder’s legitimate heirs.
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) pension programme was introduced by the government in 2017 to provide retirement benefits to senior people. A guaranteed pension is available to people above 60 years of age and above under the LIC-managed programme. If you are interested in investing in the programme, then March 31, 2023, is the last date for the same. Pension payments under the PMVVY are made by the pay-out choice that the investor chooses when the funds are invested in the plan. Pension payments may be given every month, every quarter, every half-year or every year.
The policy can be bought for a price ranging from Rs 1,56,658 for a Rs 12,000 annual pension to Rs. 14,49,086 for an Rs1,11,000 annual pension under the annual pension option. Arrears of the pension will be reimbursed if the pensioner lives past the ten-year insurance term (at the end of each period according to the mode selected). However, if the pensioner passes away during the policy’s term, the purchase sum is reimbursed and given to the nominee or the policyholder’s legitimate heirs.
The lump-sum investment in the PMVVY pension plan, under which retirees will receive a pension income, can be used to buy the plan. The pension payout is handled using NEFT or the Aadhaar Enabled payout system. Consequently, based on the method of pension payment- monthly, quarterly, half-yearly or yearly, the first pension instalment will be paid one month, three months, six months or a year after the date of purchase of the scheme.
Investing in the scheme will prevent the investor from getting a deduction for investments up to Rs 1.5 lakh under section 80C of the Income Tax Act because the scheme is not an eligible investment under the section. Returns from this scheme will be taxed at the time of receipt in line with current tax laws and the relevant tax rate. When calculating the benefits that will be paid out under the plan, the quantity of tax (GST) paid won’t be taken into consideration.
The policy allows for an instant withdrawal during the policy term in certain circumstances, such as when a pensioner needs money for the treatment of a severe or terminal disease of themselves or a spouse. The Surrender Value due in such cases will be equivalent to 98% of the purchase price. A loan facility becomes accessible after three policy years have passed. Note that the highest loan amount is only 75% of the purchase price. At regular intervals, the rate of interest that will be charged on the loan amount will be determined.
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