Staff of state governments, state-owned enterprises and private sector will now be able to enjoy the leave travel concession (LTC) cash voucher scheme, which the Finance Ministry had earlier announced only for Central-government employees.
The move will give a push to spending in the upcoming festive season. Also, this is an attractive initiative for employees to encash their leaves without travelling, amidst the ongoing pandemic.
Just like for Central government employees, the staff of state government and state-owned enterprises as well as private sector can now purchase goods and services in lieu of the tax-exempt portion of the LTC or leave travel allowance (LTA).
Thus, cash allowance — with a limitation of Rs 36,000 per person as deemed LTC fare per person (round trip) to non-central Government employees — will be exempt from income tax, subject to fulfilment of conditions. Similar income-tax exemption will be provided to non-Central government staff too. However, the condition is that: the employees will have to exercise the option for the deemed LTC fare in lieu of the applicable LTC in the 2018-21 block time period; they will have to purchase goods and services worth three times the LTC and one time the leave encashment amount; they will have to ensure that the GST of the goods is at least 12 per cent and the purchases are made from a GST-registered vendor through digital mode; they will have to submit a voucher indicating the GST number and the amount of GST paid; they will have to make the purchases between October 12, 2020 and March 31 2021; if the employees spend less than three times the deemed LTC fare on specified expenditure during the specified period, t
hey will not be entitled to the full amount LTC fare and the associated income-tax exemption.
Employees who have opted to pay income tax under concessional tax regime or new tax regime, will not be eligible for the scheme.