Avail LTC benefits on your insurance purchases till March 2021

Central and non-central government employees can – even without travelling – enjoy LTC benefits on specific expenses, including insurance.

Avail LTC benefits on your insurance purchases till March 2021

The Finance Ministry has declared that premiums paid against new insurance policy purchases made during the period from 12 October 2020 to 31 March 2021 will be covered under Leave Travel Concession. It was made available under the cash voucher scheme to central government employees. Now non-central government employees, too, will be allowed a maximum of Rs 36,000 as deemed LTC fare subject to fulfilment of conditions. It has clarified that any premium paid against existing policies is not eligible for this benefit.

The Ministry had earlier said that submission of original premium payment receipt is mandatory for availing of this reimbursement. However, it has now clarified that self-attested copies of the premium payment are sufficient to avail of the benefit and those original payment particulars are not required to be furnished. 

The Finance Minister had disclosed last month that this scheme would be a part of the government’s initiative to rekindle demand in the economy. The LTC scheme allows central government employees to encash their leaves against ‘deemed fare of travels’. Due to their inability to go on trips during the pandemic, they can instead opt to spend three times the amount on goods and services, provided they attract a GST of at least 12%.

These transactions can be paid for by means of cheque, demand draft, or digitally. The vouchers or bills of these transactions have to be submitted by 31 March 2021. The reimbursement against the deemed travel fare and leave encashment will be made against these submissions. 

Related: FM relaxes rules of LTC cash voucher scheme

How is LTC availed of by employees?

An employee can claim reimbursement for their travel expenses and that of their family. Only travelling expenses are covered under LTC; no other incidental expenses are allowed. It is allowed for travel to any region within India and can be availed of twice in a block of four years. The current four-year block for LTC purposes is 2018-2021.

Can the expenses in place of deemed travel be made in the names of family members?

If the invoice of the expense made is in the name of the employee’s family members, the same will be allowed for reimbursement. But such spouse and family members should be eligible for LTC fare. So, expenses made in the name of family members who have been declared in LTC records will be eligible for this reimbursement.

Related: Single premium vs regular premium products in insurance. Which scores higher?

What happens when the expenses are less than three times of the deemed LTC fare?

The employee has to spend three times the amount of the deemed travel fare on goods and services attracting at least 12% GST. In case the employee ends up spending less than this amount, the reimbursement will be available on a pro rata basis.

Can the employee claim expenses paid on EMIs?

If the expense falls within the specified timeline and entails a GST of 12% or above, EMI payments made during the period are also eligible. The employee has to submit an invoice against which such EMI payment has been made. How much Insurance premium do you need to pay? Find out with this article. 

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