LTC Cash Voucher Scheme 2020 / 2021 – Eligibility, Rules and How to claim?
LTC Cash Voucher scheme 2020 / 2021 was recently introduced by the Govt India which gives some real good benefits to all the employees(Govt/Private) who are eligible for LTA/LTC. The LTC Cash Voucher scheme 2020 was initially launched for the central Govt employees which is now extended to all types of employees i.e. Centra govt/State govt/Private sector employees.
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What is LTC Cash Voucher Scheme 2020 / 2021 ?
Due to COVID-19 no one could travel anywhere so the Govt of India have come up with LTC Cash Voucher scheme 2020 – 2021 under which the Central govt/state govt/private sector employee can avail the LTC Cash Voucher which will replace the actual travel which was earlier required to avail the tax benefits.
This is what the circular says, source Incometax India –
- In view of the Covid-19 pandemic and resultant nationwide lockdown as well as disruption of transport and hospitality sector, as also the need for observing social distancing, a number of employees are not able to avail of Leave Travel Concession (LTC) in the current Block of 2018-21.
- With a view to compensate Central Government employees and incentivise consumption, thereby giving a boost to consumption expenditure, the Government of India allowed payment of cash allowance equivalent to LTC fare to Central Government employees subject to fulfilment of certain conditions vide OM No F. No 12(2)/2020-Ell (A) dated 12th October 2020. It has also been provided that since the cash allowance of LTC fare is in lieu of deemed actual travel, the same shall be eligible for income-tax exemption on the lines of existing income-tax exemption available for LTC fare.
- In order to provide the benefits to other employees (.e. non-Central Government employees) who are not covered by the above mentioned OM, it has been decided to provide similar income-tax exemption for the payment of cash equivalent of LTC fare to the non-Central Government employees also. Accordingly, the payment of cash allowance, subject to maximum of Rs 36,000 per person as Deemed LTC fare per person (Round Trip) to non-Central Government employees, shall be allowed income-tax exemption subject to fulfilment of conditions specified in para 4.
- The income tax exemption to receipt of deemed LTC fare by a non-Central Government employee (“the employee’) shall be allowed subject to fulfilment of the following conditions:
(а) The employee exercises an option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.
(b) The employee spends a sum equals to three times of the value of the deemed LTC fare on purchase of goods / services which carry a GST rate of not less than 12% from GST registered vendors / service providers (‘the specified expenditure’) through digital mode during the period from the 12th of October, 2020 to 31st of March, 2021 (‘specified period’) and obtains a voucher indicating the GST number and the amount of GST paid.
(c) An employee who spends less than three times of the deemed LTC fare on specified expenditure during the specified period shall not be entitled to receive full amount of deemed LTC fare and the related income-tax exemption and the amount of both shall be reduced proportionately as explained in Example-A below
5.The DDOs shall allow income-tax exemption subject to fulfilment of the above conditions after obtaining copies of invoices of specified expenditure incurred during the specified period. Further, as this exemption is in lieu of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime under section 115BAC of the Income-tax Act, 1961 shall not be entitled for this exemption.
6.The clarifications issued by the Department of Expenditure, Ministry of Finance for the Central Government employees vide OM F. No 12(2)/2020-Ell (A) Dated 20th October, 2020 and subsequent clarification, if any, issued in this regard shall apply mutatis mutandis to non-Central Government employees also subject to fulfilment of conditions specified in the preceding paras
7.The legislative amendment to the provisions of the Income-tax Act, 1961 for this purpose shall be proposed in due course.
Example-A
Deemed LTC Fare :
: Rs.20,000 x 4 = Rs. 80,000
Amount to be spent : Rs. 80,000 x 3 = Rs. 2,40,000
Thus, if an employee spends Rs. 2,40,000 or above on specified expenditure, he shall be entitled for full deemed LTC fare and the related income-tax exemption. However, if the employee spends Rs. 1,80,000 only, then he shall be entitled for 75% (i.e. Rs. 60,000) of deemed LTC fare and the related income-tax exemption. In case the employee already received Rs. 80,000 from employer in advance, he has to refund Rs. 20,000 to the employer as he could spend only 75% of the required amount.
LTC Cash Voucher Scheme 2020 / 2021 Order PDF
Here is the tweet from Incometax India confirming the same
How to Avail LTC Cash Voucher Scheme 2020 – 2021 ?
As per the circular; you have to spend 3 times of the eligible LTA/LTC allowance to get 100% tax benefits for the LTA/LTC allowance. Please check your LTA/LTC allowances in your salary structure and purchase any goods that has GST of 12% or above.
It’s a bonanza specially for people who were looking to purchase high value items like Car and fall into the highest tax bracket. You can potentially save a lot of money by this scheme.
If you do not spend 3 times the amount of LTA/LTC then you will get 75% benefit of the amount spent.
FAQs on LTC Cash Voucher Scheme 2020 – 2021
Is the LTC Cash Voucher scheme 2020 – 2021 scheme applicable for private sector employees?
Yes, the LTC Cash Voucher scheme 2020 is applicable for all types of employees i.e. central govt/state govt/private sector employees
Can I purchase a car and avail the LTC Cash Voucher scheme 2020?
Yes, Since car has 28% GST it qualifies for the LTC Cash Voucher scheme 2020. how ever you will only get LTC Cash Voucher scheme 2020 benefits according to the LTC/LTA allowance available for you.
To qualify for the LTC Cash Voucher scheme 2020, when should I make the purchase?
Between 12th of October, 2020 to 31st of March, 2021.
How do I know how much I am eligible for LTC Cash Voucher scheme 2020 – 2021 ?
Please check you salary structure under which you can find the LTC/LTA allowance you are eligible for.
What are the LTC cash voucher scheme list of items?
Since LTC cash voucher scheme allows you to purchase items which has GST of more than 12%. Here are the list of items which qualifies for LTC cash voucher scheme:-
The list of items which carry 12% and above GST rate is provided below
List of Items which carry GST 12%
Preparations of vegetables, fruits, nuts or other parts of plants, including pickle, murabba, chutney, jam, jelly
Ketchups, sauces and mustard sauce but excluding curry paste, mayonnaise and salad dressings, mixed condiments and mixed dressings
Bari made of pulses including mungodi
Menthol and menthol crystals, peppermint, fractionated/de-terpenated mentha oil, dementholised oil, Mentha piperita oil and spearmint oil
All diagnostic kits and reagents
Plastic beads
Exercise books and note books
Glasses for corrective spectacles and flint buttons
Spoons, forks, ladles, skimmers, cake servers, fish knives, tongs
Fixed Speed Diesel Engines
Two-way radio (Walkie talkie) used by defence, police and paramilitary forces etc.
Intraocular lens
Corrective spectacles
Playing cards, chess board, carom board and other board games, like ludo, etc.
Debagged/roughly squared cork
Items manufactured from natural cork
Agglomerated cork
List of Items which carry GST 18%
• Kajal pencil sticks
• Dental wax
• Plastic Tarpaulin
• School satchels and bags other than of leather or composition leather; toilet cases, Hand bags and shopping bags of artificial plastic material, cotton or jute; Handbags of other materials excluding wicker work or basket work
• Headgear and parts thereof
• Precast Concrete Pipes
• Salt Glazed Stone Ware Pipes
• Aluminium foil
• All goods, including hooks and eyes
• Rear Tractor tyres and rear tractor tyre tubes
• Rear Tractor wheel rim, tractor centre housing, tractor housing transmission, tractor support front axle
• Weighing Machinery other than electric or electronic weighing machinery
• Printers other than multifunction printers
• Ball bearing, Roller Bearings, Parts & related accessories
• Transformers Industrial Electronics
• Electrical Transformer
• Static Converters (UPS)
• CCTV including CCTV with video recorders
• Set top Box for TV
• Computer monitors not exceeding 17 inches
• Electrical Filaments or discharge lamps
• Winding Wires, Coaxial cables and Optical Fiber
• Perforating or stapling machines (staplers), pencil sharpening machines
• Baby carriages
• Instruments for measuring length, for use in the hand (for example, measuring rods and tapes, micrometers, callipers)
• Bamboo furniture
• Swimming pools and paddling pools
• Televisions/Monitors (upto 32 inches)
• Power banks powered by Lithium-ion batteries
• Sports goods, games consoles and related items with HS code 9504
• All items with HS code 8483 including gear boxes, transmission cranks and pulleys
• Used or retreaded pneumatic rubber tires
List of Items which carry GST 28%
Luxury items such as small cars, consumer durables like AC and Refrigerators, premium cars, cigarettes and aerated drinks, High-end motorcycles are included here.
Whether we can purchase different items under this scheme like we purchase washing machine, mobile, AC or not?
Any item which caries GST more than 12% is eligible for the LTC cash voucher sheme.
I availed home LTC in 2019. What is my eligibility for LTC cash voucher scheme?
This scheme is for the LTC block of 2018-21. Normally, a block contains two LTC fare (home town and anywhere in India). If one has been availed and the other remaining, the same can be utilised for this purpose. Any unutilized LTC of the block of 2018-21 is eligible.
How spending of 3 to 4 times on purchasing of products will be tracked? Will purchase made online from e-commerce website be acceptable?
Any purchase should have purchase invoice with GST details on it. It doesn’t matter if you have purchased the item online or offline if you have purchase receipt with GST details then your purchase is valid. Please make sure you have proper name in the invoice.
What is LTC Cash Voucher scheme 2020 / 2021 last date?
You need to purchase the qualifying items for LTC cash voucher scheme by 31st March 2021.
