The Finance Minister, Nirmala Sitharaman while announcing the Budget 2021-22 has proposed the Exemption for Leave Travel Concession (LTC) Cash Scheme which will be effective from 1 April, 2021.
The Finance Minister said, “in order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC subject to incurring specified expenditure.”
The government has introduced a LTC/LTA cash voucher scheme to allow employees eligible for LTC/LTA to claim tax exempt reimbursement of similar amounts subject to certain limits and spending conditions. This has been done as employees are unable to travel due to the coronavirus pandemic.
The government has proposed the exemption in respect of the value of travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding on leave to any place in India.
It has been further proposed to insert a proviso so as to provide that for the assessment year beginning on the 1 April, 2021, in the case of an individual, the value in lieu of any travel concession or assistance received by, or due to, such individual shall also be exempted, subject to fulfillment of such conditions (including the condition of incurring such amount of such expenditure within such period), as may be provided by rules.
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