S Vasudevan, Partner, Lakshmikumaran & Sridharan Attorneys says that the provisions of section 80C of Income Tax Act contain an exhaustive list of deductions. Though the provisions of section 80C provide a deduction for sum deposited under Senior Citizens’ Saving Scheme, a similar deduction is not available for Pradhan Mantri Vaya Yojna. “However, a representation can be filed before Income Tax Department to include the sum paid under this scheme as an eligible deduction under section 80C of Income Tax Act to bring this scheme at same pedestal as the Senior Citizens’ Saving Scheme. The inclusion, however, will require legislative amendment which can be made in the subsequent budgets,” he said.
While the scheme does not offer Section 80C tax benefits, senior citizens who are not concerned with tax saving could evaluate the scheme as an investment option. Adhil Shetty, CEO, BankBazaar.com says that senior citizens enjoy higher level of tax exempted income as Rs 3 lakh per annum is the tax exemption limit for them as per the tax slab rates. Super senior citizens (age above 80) enjoy much higher tax-exempt income limit of Rs 5 lakh per annum. Because of this reason, intensive tax planning is not a necessity for many senior citizens. Their priority, instead, should be invest in an avenue that will assure steady income for the rest of their lives. “Hence, by investing in this scheme you get 8 percent returns on the invested corpus along with a maximum monthly income of Rs 10,000 today. Basically, with pension plans, low returns have been a concern, and therefore a plan like this which is offering 8 percent assured returns is a welcome move,” he said.
Free Look period: If any senior citizen is not satisfied with the “Terms and Conditions” of the policy, then they may return the policy to the LIC within 15 days (30 days if the policy is purchased online) from the date of receipt of the policy stating the reason of objections. The refund amount you get will be the purchase price after deducting the stamp duty charges and pension paid if any.