Budget 2023: Big bonanza for senior citizens

Senior Citizens Savings Scheme

Budget 2023 has enhanced the attractiveness of two important financial investments popular with senior citizens.

Finance minister Nirmala Sitharaman doubled the maximum limit under the Senior Citizen Savings Scheme (SCSS) to Rs 30 lakh from Rs 15 lakh. The scheme offers assured interest of 8 percent per annum. The interest is paid quarterly.

Additionally, the investment limit under the popular Post Office Monthly Income Scheme (POMIS) has been raised to Rs 9 lakh from Rs 4.5 lakh. In case of joint accounts held in POMIS, the investment limit has been hiked to Rs 15 lakh from Rs 9 lakh. The scheme pays monthly interest at the rate of 7.1 percent per annum.

Additional benefits

On both SCSS and POMIS, interest rates were revised up in December 2022. Since these schemes are backed by a sovereign guarantee, there is no credit risk involved.

These schemes are popular among senior citizens who need a regular income.

In the current scenario of high inflation, demand has grown for investment avenues with little credit risk and high-interest rates.

The rate on SCSS is higher than that offered by fixed deposits of nationalized banks. The increased investment limit for the SCSS hence should work in favour of senior citizens looking for extra returns on their retirement kitty.

Both SCSS and POMIS have a tenure of five years from the date of investment. SCSS accounts can be extended for three years upon maturity.

What’s more, investment of up to Rs 1.5 lakh in a financial year, in SCSS fetch a deduction under section 80C along with other eligible investments. The interest paid by SCSS and POMIS are taxable in the hands of investors.

Pensioners availing of the new tax regime, too, benefitted in Budget 2023. The benefit of standard deduction has been extended to them as well. The standard deduction hadn’t been available in the new income tax regime.

Senior citizens had been expecting an enhancement of investment limit under the Pradhan Mantri Vaya Vandana Yojana (PMVVY). But that didn’t happen. This scheme is managed by Life Insurance Corporation of India and offers assured pension at the rate of 7.4 percent per annum payable monthly for a full policy term of 10 years, on policies bought in the financial year 2022-2023. A total of 860,000 subscribers, with a subscription amount of Rs 84,659.4 crore, benefited from the plan as of September 30, 2022, according to data published in Economic Survey 2023. The investment limit under PMVVY has been left unchanged at Rs 15 lakh.

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