Government Pension Scheme APY

The Government of India is extremely concerned about the old age income security of the working poor and is focused on encouraging and enabling them to join the National Pension System (NPS).  To address the longevity risks among the workers in unorganised sector and to encourage the workers in unorganised sector to voluntarily save for their retirement, who constitute 88% of the total labour force of 47.29 crore as per the 66^th Round of NSSO Survey of 2011-12, but do not have any formal pension provision, the Government had started the Swavalamban Scheme in 2010-11. However, coverage under Swavalamban Scheme is inadequate mainly due to lack of clarity of pension benefits at the age after 60.

The Finance Minister has, therefore, announced a new initiative called Atal Pension Yojana (APY) in his Budget Speech for 2015-16. The APY will be focussed on all citizens in the unorganised sector, who join the National Pension System (NPS) administered by the Pension Fund Regulatory and Development Authority (PFRDA) and who are not members of any statutory social security scheme. Under the APY, the subscribers would receive the fixed pension of    Rs. 1000 per month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the age of 60 years, depending on their contributions, which itself would vary on the age of joining the APY. The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more. The benefit of fixed pension would be guaranteed by the Government. The Central Government would also co-contribute 50% of the subscriber’s contribution or Rs. 1000 per annum, whichever is lower, to each eligible subscriber account, for a period of 5 years, i.e., from 2015-16 to      2019-20, who join the NPS before 31^st December, 2015 and who are not income tax payers. The APY would be launched from 1^st June, 2015. The existing subscribers of Swavalamban Scheme would be automatically migrated to APY, unless they opt out.

Benefit of APY:   Fixed pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins and contributes between the age of 18 years and 40 years. The contribution levels would vary and would be low if subscriber joins early and increase if he joins late.

Eligibility for APY:       Atal Pension Yojana (APY) is open to all bank account holders who are not members of any statutory social security scheme. 

Age of joining and contribution period:   The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore, minimum period of contribution by the subscriber under APY would be 20 years or more.

Focus of APY:     Mainly targeted at unorganised sector workers.

Enrolment and Subscriber Payment:       All bank account holders under the eligible category may join APY with auto-debit facility to accounts, leading to reduction in contribution collection charges.

Enrolment agencies:    All Points of Presence (Service Providers) and Aggregators under Swavalamban Scheme would enrol subscribers through architecture of National Pension System.  

Operational Framework of APY:   It is Government of India Scheme, which is administered by the Pension Fund Regulatory and Development Authority. The Institutional Architecture of NPS would be utilised to enrol subscribers under APY.

Funding of APY: Government would provide (i) fixed pension guarantee for the subscribers; (ii) would co-contribute 50% of the subscriber contribution or Rs. 1000 per annum, whichever is lower, to eligible subscribers; and (iii) would also reimburse the promotional and development activities including incentive to the contribution collection agencies to encourage people to join the APY.

Age of Joining, Contribution Levels, Fixed Monthly Pension and Return of Corpus to the nominee of subscribers

The Table of contribution levels, fixed monthly pension to subscribers and his spouse and return of corpus to nominees of subscribers and the contribution period is given below. For example, to get a fixed monthly pension between   Rs. 1,000 per month and Rs. 5,000 per month, the subscriber has to contribute on monthly basis between Rs. 42 and Rs. 210, if he joins at the age of 18 years. For the same fixed pension levels, the contribution would range between        Rs. 291 and Rs. 1,454, if the subscriber joins at the age of 40 years. 

Concessions to Senior Citizens by BSNL & MTNL

Department of Telecommunications has made special provisions for senior citizens who apply for a new telephone connection. The department has earmarked separate priority category for senior citizens wherein they can apply for registration.

(b) In case of any complaint or fault with the telephone a senior citizen’s complaint is redressed on a priority basis.

Mahanagar Telephone Nigam Limited (MTNL) and Bharat Sanchar Nigam Limited (BSNL) are distinct, independent, commercial entities operating in mutually exclusive geographical areas. These Public Sector Undertakings (PSUs) have their own commercial policies for providing various concessions to senior citizens.

MTNL (Delhi) gives 25% discount in rentals (Tariff Plan-250 only) and installation to Senior Citizens who are 65 years or above in age. Please submit proof of age when applying to MTNL for availing this concession. Application form  for a new connection (MTNL Delhi) in senior citizen category is available here.

MTNL (Mumbai) has a Non-OYT-Special category for Senior Citizens aged 65 years or above.  To apply for a new connection in Mumbai, senior citizens can fill this application form. Whereas to avail senior citizen concession on an already existing telephone connection (MTNL Mumbai) this application form needs to be filled in.

Kindly note that these filled in forms are to be submitted to the MTNL offices in your city or sanchar haat. In case of any specific query you may also call toll freeMTNL Help line 1500 from any MTNL number.

BSNL: Senior citizens of the age of 65 years and above are entitled for registration of telephone on priority under Non-OYT Special category. They are exempted from payment of registration charges.

The Government does not intend to intervene in the commercial decisions of the two PSUs.

Senior citizen pension scheme in India: 10 things to know about Pradhan Mantri Vaya Vandana Yojana

The Pradhan Mantri Vaya Vandana Yojana is a pension scheme announced by the Government of India exclusively fo senior citizens, it will be available from 4th May, 2017 to 3rd May,2018.
One can subscribe to PMVVY Pension Scheme offline as well as online through the Life Insurance Corporation of India.

Influenced by the success and popularity of Varishtha Pension Bima Yojana 2003 and Varishtha Pension Bima Yojana 2014 schemes and to protect elderly people aged 60 years and above in the falling interest regime, the Modi government recently announced the launch of a simplified scheme of assured pension, called Pradhan Mantri Vaya Vandana Yojana (PMVVY). The scheme is currently being implemented through the Life Insurance Corporation (LIC) of India and was formally launched by Finance Minister Arun Jaitley in New Delhi recently.

As per the scheme, on payment of an initial lump sum amount ranging from a minimum purchase price of Rs 1,50,000 for a minimum pension of Rs 1000 per month to a maximum purchase price of Rs 7,50,000 for a maximum pension of Rs 5,000 per month, subscribers will get an assured pension based on a guaranteed rate of return of 8% per annum, payable monthly.

Here are 10 things to know about the scheme:

1. The Pradhan Mantri Vaya Vandana Yojana is a pension scheme announced by the Government of India exclusively for senior citizens. It will be available from 4th May, 2017 to 3rd May, 2018.

2. One can subscribe to the PMVVY Pension Scheme offline as well as online through the Life Insurance Corporation of India.

3. PMVVY Pension Scheme provides an assured return of 8% p.a. payable monthly (equivalent to 8.30% p.a. effective) for 10 years.

4. Pension is payable at the end of each period, during policy term of 10 years, on monthly/ quarterly/ half-yearly/ yearly basis as chosen by the pensioner.

5. Death Benefit: On the death of the pensioner during the policy term of 10 years, the purchase price shall be refunded to the beneficiary.

6. Maturity Benefit: On survival of the pensioner to the end of the policy term of 10 years, purchase price along with final pension installment shall be payable.

7. Eligibility Conditions and Other Restrictions:

Minimum Entry Age: 60 years (completed)

Maximum Entry Age: No limit

Policy Term: 10 years

Minimum Pension: Rs 1,000 per month
Rs 3,000 per quarter
Rs 6,000 per half year
Rs12,000 per annum

Maximum Pension: Rs 5,000 per month
Rs 15,000 per quarter
Rs 30,000 per half year
Rs 60,000 per annum

8. Payment of Purchase Price

The scheme can be purchased by payment of a lump sum purchase price. The pensioner has an option to choose either the amount of pension or the purchase price.

The minimum and maximum purchase price under different modes of pension will be as under:

Mode of Pension  Minimum Purchase Price  Maximum Purchase Price

Yearly	Rs. 1,44,578/-	Rs. 7,22,892/-
Half-yearly	Rs. 1,47,601/-	Rs. 7,38,007/-
Quarterly	Rs. 1,49,068/-	Rs. 7,45,342/-
Monthly	Rs. 1,50,000/-	Rs. 7,50,000/-

9. Loan: Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75% of the purchase price.

The rate of interest to be charged for loan amount shall be determined at periodic intervals. For the loan sanctioned in Financial Year 2016-17, the applicable interest rate is 10% p.a. payable half-yearly for the entire term of the loan.

Loan interest will be recovered from pension amount payable under the policy. The loan interest will accrue as per the frequency of pension payment under the policy and it will be due on the due date of pension. However, the loan outstanding shall be recovered from the claim proceeds at the time of exit.

10. Taxes: Statutory Taxes, if any, imposed on this plan by the Government of India or any other constitutional Tax Authority of India shall be as per the tax laws and the rate of tax as applicable from time to time. The amount of tax paid shall not be considered for the calculation of benefits payable under the plan.

7 Special Tax benefits for Senior Citizens

The Indian Income Tax Act gives certain tax benefits to Senior Citizens and also tries to ensure that income tax e-filing is a hassle free process. The complete list of all the tax benefits available to senior citizens is compiled in this article.

Who is a Senior Citizen for Income Tax purpose?

For the purpose of Income Tax, there are 2 categories of Senior Citizens

1. Senior Citizens: Those above 60 years of age
2. Super Senior Citizens: Those above 80 years of age

Tax Benefits for Senior Citizens

1. Benefits of Slab Rates

The income tax slab rates for senior citizens are differential for senior citizens as compared to non-senior citizens. The slab rates are as follows:

Particulars	Non-Senior Citizen	Senior Citizen	Super-senior Citizen
Tax Free	Up to 2.5 Lakh	Up to 3 Lakh	Up to 5 Lakhs
5% Tax	2.5 Lakh to 5 Lakh	3 Lakh to 5 Lakh	NA

As the slab rates are beneficial to Senior Citizens, this converts into a tax saving of Rs. 5000 for the Senior Citizens and Rs. 30,000 for the Super Senior Citizens. For complete income tax slabs refer: Income Tax Slab Rates

2. Interest Income exempted upto Rs. 50,000

With effect from Financial Year 2018-19, new Section 80TTB has been introduced which allows for deduction for interest of Rs. 50,000. The amount earned over Rs. 50,000 would be taxable as per the Slab Rates of the Senior Citizens.

For eg: If a senior citizen earns interest income of Rs. 75,000, out of this – Rs. 50,000 would be allowed as a deduction under Section 80TTB and the balance Rs. 25,000 would be taxable as per the slab rates.

However, it is important to note that no deduction under Section 80TTA of Rs. 10,000 for Interest on savings account would be allowed in such cases.

3. Deductions under Section 80D for payment of Medical Insurance Premium

The deduction allowed under section 80D for payment of medical insurance premium is Rs 25,000 for non-senior citizens. However, this deduction increases to Rs 50,000 for Senior Citizens (increased from Rs. 30,000 to Rs. 50,000 in Budget 2018 and applicable from 1st April 2018)

Moreover, in case of very super-senior citizens i.e. people above the age of 80, deduction under Section 80D is allowed not only for payment for Medical Insurance Premium but also for the actual expense incurred on treatment by very super senior citizens.

4. Exempted from payment of Advance Tax

Senior Citizens not having business income are exempted from payment of any Advance Tax and are only required to pay Self Assessment Tax on their total income (Inserted by Finance Act 2012)

5. Non-deduction of TDS on Interest

In case the total income of a senior citizen is exempted from the levy of income tax and nil tax is payable by him for that financial year, he can submit Form 15H for non-deduction of TDS on Interest on Fixed Deposit.

In case of Senior Citizens, this form can be submitted if the Total Income after Deductions is less than the minimum amount exempted from the levy of tax whereas in case of non-senior citizens this form is applicable if the Total Income before deductions is less than the minimum amount exempted from levy of tax.

Thus, in case of Senior Citizens the benefit is higher and therefore Form 15H is to be filed in case of Senior Citizens whereas Form 15G is to be filed in case of non-senior citizens.

Recommended Read

• Form 15H for Nil/Lower Deduction of TDS
• Computation of Tax on Fixed Deposit

The threshold for deduction of taxes under Section 194A in case of senior citizens has also been raised from Rs 10,000 to Rs. 50,000. This amendment was introduced in Budget 2018 and is applicable from FY 2018-19 onwards.

6. Higher Deduction under Section 80DDB for ailment of specified disease

Section 80DDB provides deduction to an assesses in case of expense on medical treatment of specified ailments. The deduction allowed under this section earlier was Rs. 60,000 for Senior and Rs. 80,000 for Super-Senior Citizens.

This has now been increased to Rs. 1,00,000 for both Senior and Super Senior Citizens with effect from FY 2018-19. [Amendment introduced vide Budget 2018]

7. No Tax on amount received under Reverse Mortgage Scheme

Reverse Mortgage is the opposite of Home Loan. In a Home Loan, you pay EMI’s to the Bank and you own the house subsequently. Under the Reverse Mortgage Scheme, regular payment is made to Senior Citizens till lifetime by mortgaging his house while the ownership remains with the senior citizen and he also occupies the house.

As per the Reverse Mortgage Scheme, on the death of the borrower, the loan is repaid with accumulated interest through sale of the house property and the balance amount received on sale is given to the legal heirs.

The amount so paid as installments to the Senior Citizen is fully exempted from the levy of Income Tax.