- Date : 13/11/2020
- Read: 3 mins
Bills for LTC cash voucher scheme can be made in the name of the spouse or dependent too.
o bring about some relief in a tough year, the Finance Minister has relaxed the rules of the LTC cash voucher scheme. It has also advised all central ministries and departments to give the Festival Advance before Diwali celebrations begin.
What does the change involve?
The Department of Expenditure of the Ministry of Finance has clarified that bills for the Leave Travel Concession (LTC) cash voucher scheme can be made in the name of the spouse or dependent as well. When the special scheme was launched in October 2020, it had said that the bill or invoice submitted had to be necessarily in the name of employee to be valid for reimbursement.
In a separate development, all Central Government employees will be eligible for a loan of Rs 10,000 under Festival Advance. This loan will be interest-free and can be used for any expenses during the holidays. The loan amount will be loaded in a RuPay card (called UTSAV prepaid card), which can be swiped in offline stores or used to buy things from e-commerce websites. The loan will be recovered in 10 EMIs. Employees will have to repay the amount they spend, while the balance (if any) will lapse post 31 March 2021.
What is the LTC cash voucher scheme?
With travel suspended due to the COVID-19 pandemic, the government announced the LTC cash voucher scheme for its employees on 20 October 2020. This scheme allowed government employees to buy goods and services according to certain specified conditions in lieu of the tax exempt portion of their LTC. This will enable them to still be eligible for tax exemption.
The conditions dictate that employees using this scheme will have to buy goods or services three times the fare and one time the leave encashment. Additionally, whatever they purchase should attract GST of 12% or more. They have to make the purchases by 31 March 2021. With respect to cash allowance, exemption up to a maximum of Rs 36,000 will be made in lieu of a deemed LTC fare for a round trip per person.
To avail of the exemptions, all purchases must be made through digital mode from GST-registered vendors and the vouchers should indicate the amount of GST paid.
Who can avail of the LTC benefit?
The LTC cash voucher scheme was initially rolled out for Central Government employees, but now the Income Tax department has extended the exemption to employees of State Governments and the private sector as well. Do you know these travel insurance exclusions in India?