LTC Cash Voucher Scheme can prove effective in saving Income Tax
On 12 October, the central government announced an income tax-free cash voucher to its employees in lieu of LTC. Employees can use these vouchers to buy products on which the GST rate is 12 percent or more. The objective of this initiative is to speed up consumption in the economy affected by Kovid-19.
Everyone can now take advantage of LTC cash voucher scheme. Government employees to those working in private companies have also come under the purview of this scheme of government. This scheme is also effective in saving income tax.
This is LTC Cash Voucher Scheme
Under the LTC Cash Voucher Scheme, there is a provision for giving tax free cash vouchers to employees in lieu of LTC.
1. Employees will have to spend three times the LTC fare on the purchase of goods / services at which the GST rate is 12% or more.
2. These things or services will have to be purchased only from registered shopkeepers / service providers, otherwise it will not get benefit.
3. Payment will have to be made digitally from October 12, 2020 to March 31, 2021.
4. They have to take a voucher, on which full details of GST number and amount have been given.
5. This exemption will be applicable for the employees in respect of LTC payments applicable in their 2018-21 time period.
Suppose family has 4 members in your family. 20,000 as rent for each person
Total LTC Rent = 20,000 x 4 = Rs 80,000
Total expenditure will be Rs. 80,000 x 3 = Rs. 2,40,000
That is, if you spend 2.40 lakh rupees then only you will be able to take advantage of LTC cash voucher scheme and you will get tax exemption. If you spend only 1.80 lakhs then it will get 75% of the total LTC fair i.e. 60,000 rupees only.
Private employees will get discounts
The Central Board of Direct Taxes (CBDT) said in a statement that employees other than the central government will get the benefit of income tax exemption on payment of a maximum of Rs 36,000 cash allowance per person on both sides as valid LTC. This exemption will be available on meeting certain conditions.
CBDT said, ‘In order to provide benefits (non-central government employees) to other employees. It has been decided to give income tax exemption to non-central employees also for payment of cash equivalent to LTC fare.’ Central employees will include state governments, public sector undertakings, banks and private sector employees.