To assistance the personnel, who have been unable to travel due to the Covid-19 pandemic, claim the Leave Travel Concession (LTC) and to increase the demand, that got crippled due to the nationwide lockdown, the government has launched the LTC Cash Voucher Scheme.
Under the LTC Scheme, personnel are permitted to acquire goods and avail services that attract GST (Goods and Services Tax) price of 12 per cent or more in lieu of travel in the present Block of 2018-21.
To avail the advantage, the personnel have to either travel or invest on goods and/or services till March 31, 2021.
If an employee chooses to travel, he/she will get the permitted travel costs reimbursed. For government personnel, it is an extra tax-absolutely free incentive, even though for private sector personnel, it is largely claiming the portion of CTC tax absolutely free.
On the other hand, to avail advantages below the LTC Cash Voucher Scheme, an employee has to invest 3 occasions the travel fare of the loved ones as per the permitted slab as properly as the quantity of leave encashment to get advantage on the quantity of travel fare and leave encashment. Again, for government personnel, it is an extra tax-absolutely free incentive, even though for private sector personnel, it is largely claiming tax advantage on the permitted quantity.
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The slab per loved ones member for an employee entitled for air travel in organization class is Rs 36,000, for these entitled for air travel in economy class is Rs 20,000, even though for personnel entitled for rail travel is Rs 6,000.
Following are the comparison of the advantages below the two solutions:
Leave Travel Concession (LTC)
- Under LTC, only the travel fare of the shortest route in permitted mode and class of an employee and his/her loved ones is reimbursed.
- To avail the advantage, the employee has to take leave for the journey period.
- The employee may well claim Leave Encashment (if obtainable) for the travel period, but it will be taxable.
- Even if earnings of a government employee is not taxable, he/she may well get the travel costs reimbursed below LTC. However, for most private sector personnel obtaining non taxable salary, travel is immaterial as LTC is portion of their CTC.
LTC Cash Voucher Scheme (LTC Scheme)
- Benefit is obtainable only on spending on goods and services that attract GST of 12 per cent or more.
- Payment has to be created in any mode other than money.
- To get the advantage, spending has to be 3 occasions.
- No want to take leave to avail the advantage.
- Where leave encashment is obtainable, it will also be tax absolutely free.
- For most private sector personnel obtaining non taxable earnings, there will be no advantage below the LTC Scheme as only tax exemption is offered on the permitted quantity.