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All you want to know about Leave Travel Concession Cash Voucher Scheme

Leave Travel Concession - Travel - Cash Voucher Scheme - Taxscan

The Finance Minister, Nirmala Sitharaman announced the special cash package equivalent in lieu of Leave Travel Concession (LTC) Fare for Central Government Employees during Block 2018-2021.

The government has announced the LTC Scheme in view of the COVID-19 nationwide lockdown which caused disruption in the transport and hospitality sector due to a number of Central Government employees are not in a position to avail themselves of LTC for travel to any place In India or their Hometowns in the current block of 2018-21.

The government with the objective to compensate and incentivize consumption by Central Government employees thereby giving a boost to consumption expenditure, it has been decided that the cash equivalent of LTC, comprising Leave Encashment and ITC fare of the entitled ITC may be paid by way of reimbursement, if an employee opts for this.

In lieu of one LTC  during Block 2018-2021 is subjected to various conditions.

Firstly, the employee spends the money of a larger sum than the entitlement on account or LTC on actual expenditure.

Secondly, the cash equivalent or full leave encashment will be allowed, provided the employee spends an equal sum. This will be counted toward. the number of leave encashment on LTC available to an employee.

Thirdly, the deemed LTC fare for this purpose for the employees who are entitled for business class of airfare; economy class of airfare, and Rail fare of any class the demand LTC fare per person will be Rs. 36,000; Rs.20,000 and Rs. 6000 respectively.

Fourthly, the cash equivalent may be allowed if the employee spends a sum 3 times or the value of the fare.

Fifthly, the amount both on account of leave encashment and fare shall be admissible if the employee spends an amount equal to the value of leave encashment and; an amount 3 times of the cash equivalent of deemed fare, as given above on purchase of such items/availing of such services which carry a GST Nil of not less than 12% from GST registered vendors/service providers through digital mode and obtains a voucher indicating the GST number and the amount of GST paid.

Sixthly, the admissible payment shall be restricted to the full value of the package (leave encashment is admissible for LTC and deemed fare) or depending upon tho spending.

For example, if the pay of an employee is Rs 1,38, 500, and has a family of 4 eligible for economy class air travel. Thus. if an employee spends Rs 2,94,015 or above, he will be allowed a cash amount of Rs. 1,34,015.

However, if the employee spends Rs. 2,40,000 only, then he may be allowed 18% on account of Leave Encashment (Rs.3,200) and 27% on account of fare value (Rs.64,800). The total amount payable shall be Rs.1,08,000.

Seventhly, While TDS is applicable in the case of leave encashment, since the cash reimbursement of LTC fare is in lieu of deemed actual travel, the same shall be allowed exemption on the lines of existing income-tax exemption available to LTC fare. The legislative amendment to the provisions of the Income Tax Act, 1961 for this purpose shall be proposed in the due course. Hence, TDS shall not be required to be deducted on the reimbursement of deemed LTC fare.

“An amount up to 100% of leave encashment and 50% of the value of deemed fare may be paid as advance into the bank account of the employee which shall be settled based on production of receipts towards purchase and availing of goods and services as given in Para 2(c) The claims under this package (with or without advance) are to be made and settled within the current financial year. Non-utilization/under-utilization of advance is to be accounted for by the DDOs in accordance with the extant provisions relating to LTC advanced i.e. immediate recovery of full advance in the case of non-utilization and recovery of unutilized portion of the advance with penal interest,” the government said.

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