7th Pay Commission latest news today: After the recent media buzz, more than 1 crore central government employees and central government pensioners are eagerly waiting for their Dearness Allowance (DA) and Dearness Relief (DR) restoration. They are also waiting for the DA announcement due from January 2021. But, the central government is yet to make any official announcement in this regard. However, the center has taken some other decisions related to their 7th CPC pay and perks. Including a new insurance policy bought between 12th October 2020 to 31st March 2021 in the list of LTC (Leave Travel Concession) is one such relief announced by the center. As per the central government advisory, the center has decided to allow all Seventh Pay Commission (7th CPC) beneficiary employees among the central government and the state government or Sarkari Naukri holders to claim their new insurance policy premium in the LTC Scheme to save their money outgo under the income tax.
Speaking on the new insurance window for central government employees and state government employees who have exhausted Section 80C limit of the Income Tax Pankaj Mathpal, Managing Editor at Profitmart said, “The income tax benefit under the LTC Scheme will be allowed on the premium paid for new policies issued between 12th October 2020 to 31st March 2021 only and not on renewal premium. So, to avail the benefit, central government employees and state government employees will have to purchase a new life insurance policy – be it a term plan or a ULIP or an annuity or an endowment plan.”
However, Pankaj Mathpal said, in case the income tax benefit is already claimed on premium payment under Section 80C, then in that case the tax benefit can’t be claimed under the LTC Scheme. So, in case a Seventh Pay Commission beneficiary is a central or state government employee whose 80C limit is exhausted, he or she may still claim benefits under the LTC Scheme. Otherwise, they have to choose whether they want to claim the benefit under Section 80C or under the LTC Scheme.
Pankaj Mathpal added that if a 7th pay commission linked beneficiary government employee purchases a single premium plan within the eligibility period, he or she would get income tax benefit on the entire premium or its maximum LTC benefit amount, whichever is lower. But for regular premium policies issued in that period, they will get benefits on the amount of premium paid till 31st March 2021, provided the aggregate amount is within its LTC limit.
Earlier, on account of restrictions in travel due to the COVID-19 pandemic, the central government had declared relaxation in the (Leave Travel concession) LTC Scheme that allows the salaried beneficiaries that include central government employees and the state government employees where 7thn CPC (Central Pay Commission) or Seventh Pay Commission is implemented, to claim income tax benefits on expenses made between 12th October 2020 to 31st March 2021 on purchase of good and availing services that attract GST rate of 12 percent or more instead of travel expenses. However, for information to the LTC Scheme beneficiaries among central government servants (CGS) and state government employees, life insurance is also included in the LTC Scheme among the services mentioned above.