Scheme for government employees - VRS payments of up to Rs 5 lakh will be exempted from tax, even if taken in installments
Finance Minister Jaswant Singh today announced the restoration of Leave Travel Concession (LTC) for government employees, which was withdrawn two years ago. The contribution-based pension scheme for new entrants to state services, which was announced in the last Budget, will also be implemented in the coming fiscal, he said in his Budget speech for 2003-04.
Singh said the government was ready with the contribution-based pension scheme announced in the last Budget, which would apply to all new government employees.
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Government employees, except those joining the armed forces, would be able to choose from a variety of pension options available on the basis of a defined contribution, he said. The scheme would also be available on a voluntary basis to private employees, he added.
Under the new system, the contribution will be shared equally between the government and the employee. Private sector employees would, however, not be entitled to the government contribution, the finance minister said, adding that the scheme would be portable and would allow the transfer of benefits in the case of a change of employment. To oversee the new scheme, an independent Pension Fund Regulatory and Development Authority would be set up, he said.
Addressing the salaried class