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Govt staff to get tax benefits on CGHS payments

HT Correspondent, Hindustan Times  New Delhi, February 27, 2010
First Published: 00:35 IST(27/2/2010) | Last Updated: 00:36 IST(27/2/2010)

Budget 2010 has brought some cheer to the estimated 55 lakh central government employees, offering tax breaks on contributions made by them towards the Central Government Health Scheme (CGHS). 


The minister said that all contributions towards the scheme would come under the existing provision of section 80 D of the Income Tax Act thereby bringing them on par with other health insurance schemes.

“Besides, contribution to health insurance schemes which is currently allowed as a deduction under the IT Act, I propose to allow contributions to the CGHS also as a deduction under the same provision,” Mukherjee said in his budget speech.

The level of contributions towards CGHS from employees was raised last year. However, the amount remained unaltered for the retired employees.   

Currently, those drawing a monthly pay package of Rs. 7,600 and above are required to make a contribution of Rs. 500 per month towards CGHS facilities.

However, those drawing a salary of Rs. 4,600 to Rs. 6,600 are needed to pay Rs. 325 per month towards the health scheme. Contributions are between Rs. 50 and Rs. 225 for employees earning upto a monthly salary of Rs. 4,200.

Earlier, there was no deduction was allowable for this contribution.

Deduction in respect of premium paid towards a health insurance policy upto a maximum of Rs. 15,000 would be available for self, spouse and dependant parents. 

According to a KPMG analysis, the move would leave more money in the hands of the central government employees. “With the introduction of this provision, the employee would be able to claim a deduction which would finally leave him with more money in his hand,” a KPMG executive said.

CGHS is a medical facility available to serving and retired government servants.

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