Due to Covid-19 pandemic and restriction on travel, most of employees are not able to claim the benefits of the Leave Travel Allowance (LTA) scheme. Given the situation arising out of Covid -19 outbreak. But In the resent Union Budget 2021-22. Union minister Nirmala Sitaraman has proposed a new scheme called Leave Travel Allowance Cash Voucher Scheme.
This scheme was announced in October 2020. For the State government employees but in this current union budget (2021-22) the government has announced this for all the individuals who are unable to travel due to the pandemic and unable to claim the benefits of LTA tax benefits
Currently as per section 10(5) of the Income-tax Act, 1961 Leave Travel Allowance scheme provides for an exemption for the value of travel concession or assistance by an employer to its employee and their family subject to employee proceeding on leave for vacation in India.
However, Considering the situation of Covid-19 Pandemic, the government has notified cash Voucher Scheme in October 2020 in the lieu of LTC Subject to Conditions.
An Individual employee required to fulfil certain conditions to avail the benefits of Cash Voucher scheme those conditions are
Under the new scheme LTC options will be exercised for the block of 2018-21.
• Tax Payers must spend the specified sum on goods or services with a GST rate of 12% or more.
• Payments for such goods or services must be made via electronic mode only.
• This expenditure must be made between 12 October 2020 – 31 March 2021.
• The amount of exemption to not exceed 36,000 per individual. (employee including his family) or 1/3rd of employer specified expenditure, whichever is less.
However, these above points specified in the Memorandum, it can be effective once the relevant Income-tax rules are notified.
This way new LTC voucher scheme gives option to the individuals to spend on eligible goods and services and claim the tax exemptions.
The Department of Expenditure under the finance ministry also clarified that purchase of goods like Bikes, Cars, etc. employee can submit a self-attested photocopy of bills as a proof for availing the benefits of the scheme.
Payments for premiums for existing Insurance policies and would not be covered under the LTC cash voucher scheme. However, Payments for premiums for insurance policies purchased during the period between October 12,2020 to March 31, 2020. Is eligible for reimbursement under the scheme.
However, bills need to be submitted on or before 31 March 2021 to avail the benefits of cash voucher scheme said the Expenditure Department
For more information on the new LTC Cash voucher scheme write to us at Info@bbnc.in