All About LTC (Leave Travel Concession) Cash Voucher Scheme

There was a GST Council meeting scheduled from 4-6 pm on Monday October 12, 2020, but ahead of that Union Finance Minister Nirmala Sitharaman addressed a press conference. The Finance Minister came up with several proposals to stimulate demand in the economy, which broadly fall under two heads consumer spending and capital expenditure.

Latest Update in LTC Cash Voucher Scheme

With the context of coronavirus pandemic and the lockdown imposed nationally along with the destructive services of transport and hospitality industries and seeking the measure of the social distance the various number of employees were not able to take leave travel concession LTC in the present block of 2018-21. To this concern, Central Government employees and incentivize. Consumption, compensate so to enhance the expenditure of consumption. To Central Government employees with respect to the accomplishment of specific conditions vide OM No F. No 12(2)/2020-EII (A) on 12th October 2020 the Government of India approved payment of cash allowance equivalent to LTC fare. Read more

Proposal regarding Consumer spending has two components, the first one is the LTC Cash Voucher scheme and the second one is Special Festival Advance Scheme. The LTC cash voucher scheme is aimed to boost consumer demand or spending.

FM further added that Govt employees and many organised sector employees have escaped the economic effect of the pandemic. Salaries of the same have been protected and ultimately the savings have increased. They should be encouraged to contribute to the revival of demand for the benefit of the less fortunate.

Under the LTC cash voucher scheme FM announced that such employees can opt to buy goods/services worth 3xfare and 1 time the leave encashment; To be eligible for this scheme, goods and services attract a GST of 12 percent and more need to be bought before March 31, 2021. Payment for the same only needs to be paid only through digital modes and GST invoice Get to know about the new E-invoice generation system on government GST portal with applicability. The system mandates to generate e-invoice for every sale by a registered business. Read more also required for the same.

FM added that “The estimated cost of the scheme for the Central government will be Rs 5,675 crore and for PSBs & PSUs it will be Rs 1,900 crore. On a conservative basis, we expect the LTC Cash Voucher Scheme to generate additional consumer demand in the range of Rs 28,000 crore”.

It further announced that a tax exemption scheme which is an alternative to the currently available Leave Travel Concession facility. To take advantage of the tax exemption, employees are required to purchase goods or services that are 3 times the amount that would be claimed within March 31, 2021 as a concession in respect of travel tickets. However, Such goods or services need to attract a GST rate at 12% Grab the information of revised GST slab rates on consumer products in India, Although the GST council finalized the slab rates like 5%, 12%, 18% and 28% Read more or more, and the payment for the same needs to be done through digital mode, it also needs to have a GST invoice. Saraswathi Kasturirangan, Partner, Deloitte India responded that “Since this benefit is available to private sector employees as well, it is important for companies to look at their policies around Leave Travel concessions and amend them in line with the above to extend the tax benefits to its employees”.