The government on Saturday proposed to make its pet life insurance scheme for senior citizens, Varishtha Pension Bima Yojana, more attractive by exempting it from service tax.
“For the benefit of senior citizens, service tax exemption will be provided on Varishtha Bima Yojana,” Finance Minister Arun Jaitley said in his Budget speech.
The Varishtha Pension Bima Yojana had been first launched by the NDA government in 2003-04, but was later discontinued. Last year, Jaitley relaunched the scheme.
The scheme available from August 15, 2014 to August 15, 2015 aims to provide financial security to citizens aged 60 years and above by ensuring regular income during their advancing years.
The scheme is managed by state-run LIC. Under the scheme, a total of 3.16 lakh annuitants are being benefited and its corpus amounts to Rs. 6,095 crore, as per LIC’s website.
It is a single premium policy and a person can get a monthly pension of Rs. 500 to Rs. 5,000, depending on the premium. As per LIC’s website, the minimum purchase price is Rs. 66,665 and the maximum purchase price is Rs. 6,66,665 if one opts for monthly pension. The minimum and maximum purchase price is slightly lower if a person opts for quarterly, half-yearly or yearly pension.
The service tax exemption announced for the scheme on Saturday is a part of a wider set of tax exemptions that Jaitley proposed in his budget.
The proposals include increase in the limit of deduction in respect of health insurance premium to Rs. 25,000 from Rs. 15,000. For senior citizens, the same limit was increased to Rs. 30,000 from Rs. 20,000.