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Varishtha Pension Scheme: FAQ
Rediff Business Desk | July 14, 2003 13:51 IST
The Life Insurance Corporation of India's Varishtha Pension Bima Yojana is a government subsidised scheme for Indian citizens aged 55 years and above in the Union Budget 2003-04.
The much-awaited scheme was finally unveiled on July 14.
Pension amount and premium
Ceiling of maximum premium applies for family as a whole. (Family comprises spouse, minor children and dependents).
The difference between the actual yield earned by the LIC on the funds invested under the scheme and the assured return of 9 per cent would be reimbursed to the LIC by the government.
The pension earned, however, is not tax-free. Tax payable by the pensioner will depend on the income slab s/he belongs to. This pension will be added to the other income, if any, and tax, if applicable, will be levied thereon.
The Union Budget for 2003-04 raised the tax rebate for senior citizens to Rs 20,000. As a result, their annual income of up to Rs 153,000 is now exempt from income tax.
In the case of senior citizens on pension the effective exemption limit would become Rs 183,000 because of the standard deduction of Rs 30,000.
They could get further relief by taking advantage of the tax rebate available under Section 88 of the Income Tax Act.
Self-declaration filed by senior citizens in regard to no deduction of tax at source is also accepted.
Where to get the form
The proposal form for the old-age pension scheme can be obtained at: http://www.licindia.com/lichome2/161proposalform.pdf