The government has announced the LTC Cash Voucher Scheme for Central Government employees as well as for non-central government employees including employees of private sectors for the LTC block period of 2018-2021 to provide for tax exemption on LTA/LTC amount received in lieu of actual travel. The government has issued various clarifications in the form of FAQs on LTC Cash Voucher Scheme which are reproduced here.
In the article, the gist of all the government orders and Office Memorandum issued on LTC Cash Voucher Scheme is reproduced for the benefit of the readers. Further, the CBDT press release on the LTC Cash Voucher Scheme extending the benefit to non-central government employees is also included.
Synopsis of LTC Cash Voucher Scheme
Summary of LTC Cash Voucher Scheme
The features of LTC Cash Voucher Scheme as announced by the Government is outlined below-
1. Tax exemption for private-sector employees who are eligible to claim the leave travel allowance from their employer. Employees who have opted for the simplified tax regime will not be able to take the benefit of the exemption.
2. To avail this tax benefit, the employee is required to spend three times the eligible amount on the purchase of goods or services which carry a GST rate of not less than 12% from GST registered vendors/service providers and the payments shall be made through digital mode only. Hence, payment in cash is not allowed under this scheme.
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3. The purchase of such goods/services can be done through multiple bills and can be purchased from online/e-commerce platforms also.
4. If an employee spends less than 3 times of the total value compared to deemed LTC fare, their income tax exemption would be reduced proportionately.
CBDT explained that if the deemed LTC Fare is Rs. 80,000 (Rs. 20,000 x 4), then the amount to be spent under the scheme is 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 per cent (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 the employer in advance, he has to refund Rs. 20,000 to the employer as he could spend only 75 per cent of the required amount.
5. The maximum deemed LTC fare is Rs. 36,000 per person under this scheme.
6. The employee has to submit the invoices to the employer for claiming the exemption under this scheme. The invoices should be in the name of the employee or his family members.
7. This is an optional scheme. An employee has to exercise this option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.
8. The LTC Cash Voucher scheme is applicable for the period from 12-Oct-2020 to 31-Mar-2021.
Text of Office Memorandum so far issued by the government and the clarifications in the form of FAQs on LTC Cash Voucher Scheme is reproduced below:
1. Introduction of LTC Cash Voucher Scheme dated 12.10.2020
F.No.12(2)/2020-EII(A)
Ministry of Finance
Department of Expenditure
EII(A) Branch
North Block, New Delhi
12th October, 2020
Office Memorandum
Sub: Special cash package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21.
In view of 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 Central Government employees are not in a position to avail themselves of LTC for travel to any place in India or their Hometowns in the current Block of 2018-21.
2. With a view to compensate and incentivise consumption by Central Government employees thereby giving a boost to consumption expenditure, it has been decided that cash equivalent of LTC, comprising Leave Encashment and LTC fare of the entitled LTC may be paid by way of reimbursement, if an employee opts for this in lieu of one LTC in the Block of 2018-21 subject to the following conditions:-
a) The employee spends the money of a larger sum than the entitlement on account of LTC on actual expenditure.
b) Cash equivalent of full leave encashment will be allowed, provided the employee spends an equal sum. This will be counted towards the number of leave encashment on LTC available to an employee.
c) The deemed LTC fare for this purpose is given below:-
d) The cash equivalent may be allowed if the employee spends a sum 3 times of the value of the fare given above.
e) The amount both on account of leave encashment and fare shall be admissible if the employee spends (i) an amount equal to the value of leave encashment and; (ii) an amount 3 times of the cash equivalent of deemed fare, as given above on purchase of such items / availing of such services which carry a GST rate of not less than 12% from GST registered vendors / service providers through digital mode and obtains a voucher indicating the GST number and the amount of GST paid.
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f) The admissible payment shall be restricted to the full value of the package [leave encashment as admissible for LTC and deemed fare] or depending upon the spending as per example given at Annexure-A.
g) While TDS is applicable in the case of leave encashment, since the cash reimbursement of LTC fare is in lieu of deemed actual travel, the same shall be allowed exemption on the lines of existing income-tax exemption available to LTC fare. The legislative amendment to the provisions of the Income-Tax Act, 1961 for this purpose shall be proposed in the due course. Hence, TDS shall not be required to be deducted on the reimbursement of deemed LTC fare.
3. Head of the Departments / DDOs may make reimbursement under this package as per the details given above on receipt of invoices of purchases made / services availed during the period post the issuance of this order from the employees who are desirous to avail this package. It may be noted that in order to avail this package an employee should opt for both leave encashment and LTC fare.
4. An amount upto 100% of leave encashment and 50% of the value of deemed fare may be paid as advance into the bank account of the employee which shall be settled based on production of receipts towards purchase and availing of goods and services as given in Para 2(e). The claims under this package (with or without advance) are to be made and settled within the current financial year. Non-utilization / under-utilization of advance is to be accounted for by the DDOs in accordance with the extant provisions relating to LTC advance i.e. immediate recovery of full advance in the case of non-utilisation and recovery of unutilized portion of the advance with penal interest.
5. These orders will take effect from the date of issuance of this Office Memorandum and will be in force during the current financial year till 31st March, 2021.
6. All the Ministries/Departments are requested to bring the contents of this OM to the notice of all its Attached and Subordinate offices for their information.'
Hindi version of this Office Memorandum will follow.
(B.K. Man than)
Deputy Secretary to the Govt, of India
Annexure-A
Example:
Pay of an employee: Rs 1,38, 500 and has family of 4 eligible for economy class air travel.
Leave Encashments (1,38,500 x 1.17) xlO / 30 = Rs. 54,015
Fare Value : Rs. 20,000 x 4 = Rs. 80,000
Total Value = Rs. 1,34,015
Amount to be spent for full cash benefit = Rs. 54,015 + 2,40,000* = Rs. 2,94,015
(a) Share of Leave Encashment in total = 54,015 X 100 / 2,94,015 = 18%
(b) Share of Fare in total = 80,000 X 100 / 2,94,015 = 27%
* 3 times of notional airfare
• Thus, if an employee spends Rs. 2,94,015 or above, he will be allowed cash amount of Rs. 1,34,015.
• However, if the employee spends Rs. 2,40,000 only, then he may be allowed 18 % on account of Leave Encashment (Rs. 43,200) and 27% on account of fare value (Rs. 64,800). The total amount payable shall be Rs. 1,08,000.
Download Office Memorandum dated 12.10.2020 on LTC Cash Voucher Scheme in pdf format
2. FAQ-Series 1 on LTC Cash Voucher Scheme dated 20.10.20
No. 12(2)/2020-E.II(A)
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated: 20th October, 2020
OFFICE MEMORANDUM
Subject: Clarification regarding queries being received in respect of Special cash package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21.
The undersigned is directed to refer to this Department’s O.M of even no. dated 12th October, 2020 and to say that this Department has been receiving queries seeking clarification relating to Special Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21 announced by the Government. A statement giving answers/clarifications to the queries is attached as annexure to this O.M.
2. This issues with the approval of Secretary (Expenditure).
S Naganathan
Deputy Secretary, E.II(A)
FAQ on LTC Cash Voucher Scheme
1. Whether the individual employee is required to take leave to avail this LTC- Cash Voucher Scheme? Whether an employee is required to undertake any travel?
An individual need not take leave for this purpose nor undertake any travel. This is a scheme in lieu of LTC travel.
2. If a particular LTC which is meant to be used for the scheme has been partially availed by either self or members of the family, whether this scheme is available and to what extent?
This scheme is applicable to the LTC fare left unutilized during the Block Year as mentioned in the O.M. dated 12.10.2020.
3. If an employee has already exhausted the prescribed limit of leave encashment for LTC, whether he will be eligible for the scheme? Whether an employee can only avail LTC fare without claiming leave encashment
An employee can avail this scheme utilizing the applicable LTC fare without leave encashment. The expenditure should be in accordance with the ratio as prescribed for LTC fare.
4. As per the scheme, an amount of upto 100% leave encashment and 50% of the value of deemed fare is to be paid as an advance to the employee opting for the scheme. It has also been stated that non utilization / under-utilization of advance is to be accounted for by the DDOs in accordance with extent provisions relating to LTC advance. If an employee spends only the advance amount and makes a claim, how this claim will be regulated?
If as per the calculation suggested in O.M. No. 12(2)/2020-E.IIA dated 12th October. 2020, the reimbursable amount is less than the advance drawn, this would be treated as under-utilization. However, after calculation of the claim, balance amount, if any may be recovered from the employee.
5. Newly joined Government employees are entitled for three Home Town and one Anywhere in India in a Block of four year. How this will be regulated?
The employee may use any one of the LTC available in a Block Year.
6. As per Special LTC provisions, an employee irrespective of his eligibility can travel by Air to places like Andaman & Nicobar, J&K and North-East under anywhere in India fare. In this case what will be the deemed fare?
The deemed fare has been calculated based on the normal eligibility of an employee and the special packages would not be applicable for this scheme.
7. Whether a single bill of purchase of goods or services is to be submitted or multiple bills can be submitted?
Multiple Bills are accepted. The purchase should have been done from the date of issue of the O.M. till the end of the current Financial Year. The purchase should carry a GST of 12% and above and payment should have been made to digital mode.
8. Whether there is any prescribed format for applying for this scheme.
There is no prescribed format. A simple application conveying the desire of the employee for availing the scheme, if advance is required for the purpose the same is to be mentioned.
9. What are the items which will qualify for reimbursement under this scheme?
Any goods and services which attract GST of 12% and above would qualify. The invoice with GST details should be submitted and payment should have been made through digital mode.
10. An employee having four family members eligible for LTC wants to avail this facility for less than 4 members. Further he wants to avail LTC for rest of the Members later.
As replied to query at S.No. 2, an employee can avail the scheme in partial, i.e. of the LTC of part of the eligible family. Since this is an optional scheme, if the LTC fare of any member of the family has not been utilized for this purpose, those members can avail LTC subject to extent instructions under LTC rules.
11. An employee incurs the expenditure on or before 31/3/2021 on the basis of invoice. Actual product or service received in April, 2021.
The reimbursement is based on production of invoice with details of GST. As far as possible, the claim should be made and settled well before 31st March, 2021 to avoid any last minute rush and resultant lapse.
12. For digital payment an employee uses credit card of his / her spouse or any family members.
It is clarified that the invoice which is being submitted for reimbursement under the scheme should be in the name of the employee who is availing the scheme.
13. Can services like interior decoration and phone bills be included?
Any service which is having a GST component of more than 12% is permissible.
14. Any limit of number of transaction?
As far as possible, the number of transactions may be limited to a minimum extent to avoid any difficulty/delay.
15. Is it allowed to do purchase from e-commerce platform?
Procurement from e-commerce platform is also permissible provided the relevant invoice/details are submitted.
Download Office Memorandum dated 20.10.2020 including FAQ on LTC Cash Voucher Scheme in pdf format
3. Clarification on LTC Cash Voucher Scheme dated 04.11.20
F. No.12(2)/2020-EII(A)
Government of India
Ministry of Finance
Department of Expenditure
E.II(A) Branch
North Block, New Delhi
4th November, 2020
Office Memorandum
Sub: Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-2021 -Clarification reg.
The undersigned is directed to refer to O.M. of even number dated 12th October 2020 and the Frequently Asked Question (FAQ) issued vide O.M. of even number dated 20th October, 2020 on the subject mentioned above.
2. Ministries/Departments have raised queries / clarifications with regard to (i) whether the advance taken as per the scheme shall be settled within 30 days of disbursal of advance and (ii) whether the invoice can be in the name of spouse and / or any family member who are eligible for LTC,
3. The Special Cash Package Scheme in lieu of one LTC is to compensate and incentivise consumption by Government Employees and the benefits can be availed up to 31.03.2021. Para 4 of O.M dated 12.10.2020 provides for advance to Government employees in lieu of LTC fare and Leave encashment. As this is a Special Cash Package, the rules relating to advance taken under LTC are not applicable in the present Scheme. Accordingly it is clarified that:
(i) the advance taken under the scheme shall be settled on or before 31st March, 2021, and
(i) the invoices of the goods and services purchased as per the scheme may be in the name of spouse or any family member who are eligible for LTC Fare.
4. This issues with the approval of Secretary (Expenditure)
(B. K. Manthan)
Deputy Secretary to the Govt of India
Download Office Memorandum dated 04.11.2020 in pdf format
4. FAQ-Series 2 on LTC Cash Voucher Scheme dated 10.11.20
No. 12(2)/2020-E.II(A)
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated 10th November, 2020
OFFICE MEMORANDUM
Subject: Clarification regarding queries being received in respect of Special cash package equivalent of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21 (FAQ No. 2).
The undersigned is directed to say that this Department has been receiving a number of queries relating to Special Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21 announced by the Government on 12th October, 2020. A set of frequently asked questions have already been clarified vide this Department’s O.M. of even No. dated 20th October, 2020 and is available on this Department’s website viz. Doe.gov.in.
2. A further set of frequently asked questions have been clarified and are attached herewith at Annexure-‘A’.
3. This issues with the approval of Competent Authority.
S Naganathan
Deputy Secretary, E.II(A)
FAQ No. 2
FAQ on LTC Cash Voucher Scheme
1. An employee whose workplace and hometown are same and is eligible for only one all India LTC in one Block Year. If that LTC is exhausted, will he be eligible for this scheme?
No. The scheme is in lieu of one LTC available during the block year.
2. If an employee does not have enough leave or less than the minimum balance of 40 days which is required in his leave and avail leave account encashment for LTC, whether he eligible for will be leave encashment in this scheme?
Leave encashment is to be in accordance with LTC Rules. The employee can however avail the benefit of scheme without the leave encashment if such encashment is not available.
3. If an employee has already availed hometown LTC(only for self) for 2018-19 along with leave encashment, can he now claim LTC cash voucher scheme with LTC for self from block year 2020-21 and for remaining family members from block 2018-19?
Yes. He can claim leave encashment as per the scheme provided it does not exceed the maximum limit of 60 days eligible for encashment.
4. If both husband and wife are working in the central government, if one is availing LTC cash voucher scheme for self and spouse and also taking LTC leave encashment, then can the spouse avail LTC leave encashment separately?
Yes
5. If an employee avails only deemed LTC fare without leave encashment, and spends less than or equal to three times of the deemed fare entitlement, how much reimbursement will he get?
Reimbursement will be on pro-rata basis.
6. Whether purchase of goods/services on loan/EMI, will be covered under this scheme? Purchase of any goods or services which attract GST of 12% and above qualify for reimbursement under this scheme.
Purchases on EMI basis are also permissible. The purchase should have been effected after the issue of the order i.e. 12.10.2020 and should have an invoice.
7. For those officials having three Hometown LTCs and one all India LTC, can they avail special cash package for year 2020 in 2021(upto 31.03.2021) and avail LTC for 2021 also in 2021?
The scheme is valid up to 31.3.2021 and is in lieu of the available LTC. An official may avail LTC for 2021 in 2021 provided the same has not been foregone in lieu of the benefits of the said scheme.
8. If a fresh recruit who is governed by LTC Rules for New Recruits is in his 8th year after recruitment opts for this scheme, can he submit bills having date of January-March 2021?
Yes, but one block year of LTC/ or one LTC to be foregone to avail the benefits of the Special Scheme.
9. Since the fresh recruits are not allocated block year, can they avail this scheme?
Yes
10. Can the payment be made by cheque /DD / Banker's Cheque/ NEFT/RTGS?
Yes
11. If a defence employee wants to buy a car from defence canteen, attracting only 14% GST as against 28% GST in the market, can he avail this scheme?
As per scheme Goods & Services attracting GST of 12% or more can be purchased.
12. If an employee has already exhausted 60 days of Leave Encashment, can he further avail 10 days Leave Encashment?
No. He can avail only deemed fare value.
12. If an employee is availing Cash scheme against year 2018- 19(extended till 31.12.2020), can he submit bills from January, 2021 to March, 2021?
Yes, provided the transactions occurred on or after 12.10.2020 and bills are submitted before 31.03.2021.
14. If a child is less than 5 year old then he is not eligible for rail fare, will he be counted as a dependent for this scheme?
Yes. Provided the child is eligible as a dependent in accordance with LTC Rules.
15. Is this scheme applicable to the Autonomous Bodies?
Autonomous Bodies can adopt the scheme provided they are already implementing LTC scheme similar to the Central Government's Scheme, before 12.10.2020.
16. Whether any advance will be given like LTC advance?
Please refer to para 4 of Ministry of Finance, Department of Expenditure OM No. 12(2)/20/E-IIA dated 12.10.2020. It has been stated that an amount up to 100% of leave encashment and 50% of the value of deemed fare may be paid as advance into the bank account of employee.
17. Whether purchase we can different items under this scheme like purchase washing we machine, mobile, AC or not?
Yes. An individual can purchase different items which attract GST of 12% and more. The payment should be made through digital mode.
18. I availed home LTC in 2019. What is my eligibility position 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 utilized for this purpose. Any unutilized LTC of the block of 2018-21 is eligible.
19. 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 with digital mode is to be supported by invoice. Based on production of invoice the spending is calculated. The intention of this scheme is to encourage every mode of purchase. It is for the employee to choose a suitable digital mode.
20. I purchased certain items after 12.10.2020 but before formally exercising my option. Can it be counted for reimbursement?
All eligible purchases on or after 12.10.2020 and before 31.3.2021 can be counted.
21. Whether the advance taken under the scheme is to be settled within 30 days of disbursal of advance as stipulated under LTC rules. Can receipt be in the name of any dependent?
The Special Cash Package Scheme in lieu of one LTC is to compensate and incentivise consumption by Government Employees and the benefits can be availed up to 31.03.2021. Para 4 of O.M. dated 12.10.2020 provides for advance to Government employees in lieu of LTC fare and Leave encashment. As this is a Special Cash Package, the rules relating to advance taken under LTC are not applicable in the present scheme. Accordingly it is clarified that:
(i) The advance taken under the scheme shall be settled on or before 31st March 2021, and
(ii) the invoices of the goods and services purchased as per the scheme may be in the name of spouse or any family member who are eligible for LTC Fare as declared in the Service records.
Download Office Memorandum dated 10.11.2020 including FAQ-2 on LTC Cash Voucher Scheme in pdf format
5. FAQ-Series 3 on LTC Cash Voucher Scheme dated 25.11.20
No.12(2)/2020/E.II.A
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated 25th November, 2020
OFFICE MEMORANDUM
Subject:- Clarification regarding queries being received in respect of Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the block 2018-21 (FAQ No.3)
The undersigned is directed to say that this Department has been receiving a number of queries relating to Special Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the block 2018-21 announced by the Government on 12th October, 2020. Two sets of frequently asked questions have already been clarified vide this Department’s OM of even no. dated 20th October, 2020 and 10th November, 2020 are available on this Department’s website viz. doe.gov.in.
2. A further set of frequently asked questions have been clarified and is attached herewith at Annexure below.
3. This issues with the approval of Secretary (Exp.).
S Naganathan
Deputy Secretary, E.II(A)
FAQ No. 3
1. An employee wishes to avail the special cash package without opting for leave encashment. As per records he has sufficient EL for encashment purpose. Whether an employee can only avail LTC fare without claiming Leave encashment even though he has not exhausted the prescribed limit for leave encashment for LTC.
An employee can avail this scheme utilizing the applicable LTC fare without opting for leave encashment. Leave encashment is optional.
2. If an employee opts for only deemed LTC fare without the leave encashment and spends less than three times of the deemed fare as has been prescribed to claim reimbursement of the deemed LTC fare, how the reimbursement would be calculated.
The reimbursement in this case would be on pro-rata basis. Since in order to claim the applicable deemed fare, an employee is required to spend three times of the deemed LTC fare, the reimbursement in the case of expenditure less than the prescribed three times would be 1/3rd of the actual expenditure. An illustration of calculation is given at annexure attached below.
3. Can an employee avail leave encashment for less than 10 days.
The number of days of Leave encashment for LTC (10 days or less than 10 days) is to be in accordance with the relevant provisions of LTC rules.
4. Will payment of premium of already existing insurance policies be covered under this scheme?
The special cash package envisages just of purchase of goods and services with GST of 12% and above made during the period between 12.10.2020 and 31.03.2021. Payment of premium of existing insurance policies does not fall under this category. However, payment of premium for insurance policies purchased during the period between 12.10.2020 and 31.03.2021 is eligible for reimbursement under the scheme.
5. If an employee buys a car or any other items or services, whether it is mandatory to submit original bills to DDO as the same may be required for claim the warranty and ownership of the item/service.
No, self attested photocopy would suffice. However, the original bills may be produces on demand for information.
6. The vouchers/bills to be submitted to avail this scheme on or before the 31st March 2021. Employees who are due to superannuate (say) on the 31st December 2020, be required to submit the vouchers/bills before his superannuation i.e. before the 31st December 2020.
Vouchers/bills should be submitted and settled before the date of superannuation in this case.
Annexure-
Example (1) (without Leave Encashment)
Claiming for family of 4 eligible for economy class air travel.
Fare Value : Rs.20,000 x 4 = Rs.80,000
Amount to be spent for full cash benefit = Rs.80,000 x 3* = Rs.2,40,000
* 3 times of notional airfare (80,000 x 3=2,40,000)
Cash benefit = Amount Spent X deemed LTC Fare (80,000 in this case)
Amount to be spent for full cash benefit
Thus, if an employee spends say Rs.2,40,000 or above, he will be allowed cash amount of Rs.80,000. However, if the employee spends less than Rs.2,40,000, say 1,80,000 then he may be allowed cash amount in the same proportion as illustrated above which comes out Rs.60,000 in this case.
[1,80,000X 80,000 / 2,40,000= 60,000],
Example (2) (without Leave Encashment)
Claiming for family of 4 eligible for Train travel.
Fare Value : Rs.6,000 x 4 = Rs.24,000
Amount to be spent for full cash benefit = Rs.24,000 x 3* = Rs.72,000
Cash benefit = Amount Spent X deemed LTC Fare (24,000 in this case)
Amount to be spent for full cash benefit
* 3 times of notional trainfare (24,000 x 3=72,000)
Thus, if an employee spends Rs.72,000 or above, he will be allowed cash amount of Rs.24,000. However, if the employee spends less than Rs.72,000 say 48,000 then he may be allowed cash amount in the same proportion as illustrated above which comes out Rs. 16,000 in this case.
[48,000 X 24,000 / 72,000 = 16,000].
Download Office Memorandum dated 25.11.2020 including FAQ-3 on LTC Cash Voucher Scheme in pdf format
6. Clarification regarding queries being received in respect of Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21 dated 16.02.2021
No.12(2)/2020/E.II.A
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated 16th February, 2021
OFFICE MEMORANDUM
Subject:- Clarification regarding queries being received in respect of Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the block 2018-21
The undersigned is directed to refer to O.M. of even number dated 12th October 2020 and the Frequently Asked Questions (FAQs) issued vide OM of even number dated 20th October 2020, 10th November 2020 and 25th November 2020 on the subject mentioned above.
2. Ministries/Departments have raised queries/clarifications with regard to :
(i) Whether any prior intimation is required just like availing the actual LTC Scheme?
(ii) The LTC for the year 2018-19 Block was extended upto 31st December, 2020. Whether claims can be made under this block till March, 2021?
3. In this regard it is clarified that the Special Cash Package is in lieu of pending LTC for the Block between 2018-21 and bills for availing this scheme are to be submitted before 31.03.2021. No prior intimation as is being given in the case of LTC Scheme is required and for the year 2018-19(extended till 31.12.2020), the claims can be made before 31.03.2021.
4. This issues with the approval of Competent Authority.
(Sunil Kumar)
Under Secretary to the Govt. of India
Download Office Memorandum dated 16.02.2021 on Clarification regarding queries being received in respect of Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the Block 2018-21 in pdf format
7. FAQ-Series 4 on LTC Cash Voucher Scheme dated 10.03.21
No.12(2)/2020/E.II.A
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated 10th March 2021
OFFICE MEMORANDUM
Subject:- Clarification regarding queries being received in respect of Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the block 2018-21.
The undersigned is directed to say that this Department has been receiving a number of queries relating to Special Cash Package equivalent in lieu of Leave Travel Concession Fare for Central Government Employees during the block 2018-21 announced by the Government on 12th October, 2020. Three sets of Frequently Asked Questions (FAQs) have already been clarified vide this Department’s O.M. of even number dated 20lb October 2020, 10th November 2020 and 25th November 2020 on the subject mentioned above.
2. A further set of frequently asked questions have been clarified and are attached herewith at Annexure-‘A’.
3. This issues with the approval of Competent Authority.
(Sunil Kumar)
Under Secretary to the Govt, of India
Annexure-A
FAQ No. 4
1. Whether the full and final settlement of the bills pertaining to LTC Cash Scheme is also to be ensured by 31s1 March, 2021, without any scope of spill over to the next financial year?
As far as possible, the claims should be made and settled well before 31st March, 2021, Ministries/Departments may consider settlement of only those claims/purchases made on or before 31st March, 2021 beyond the due date, i.e. 31st March, 2021.
Whether payment detail of digital instrument used for making payment against this scheme is to be furnished by the employee, along with the claim?
It is clarified that it is for the competent authority of concerned Deptt/PAO to decide on additional document for checking the veracity of claim.
Is the scheme admissible if payment is made digitally through friend, relative or any other person?
It has already been clarified in point 12 of the FAQ issued vide O.M No. 12(2)/2020-E.II.A dated 20.10.2020 that for digital payment an employee can use credit card of himself/herself, spouse or any family member.
For newly recruited officials having three Hometown LTC and one all India LTC, can they avail Special Cash Package for year 2020 in 2021 (upto 31.03.2021) if item is purchased after 31.12.2020 but before 31.03.2021, that is without prior intimation to office?
A newly recruited employee, whose LTC expires in December, 2020 which remains unutilized, may be allowed to claim the cash package in lieu of that LTC till 31st March, 2021.
Portion of the payment was made in cash as against digital payment for the entire transaction. Whether this will be eligible under the Scheme?
The portion of digital payment may be allowed to be reimbursed subject to other conditions as contained in the O.M. dated 12.10.2020.
Download Office Memorandum dated 10.03.2021 including FAQ-4 on LTC Cash Voucher Scheme in pdf format
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8. Clarification regarding full and final settlement of bills/claims pertaining to LTC Special Cash Package Scheme
No. 12(2)/2020-E.ll(A)
Government of India
Ministry of Finance
Department of Expenditure
North Block, New Delhi
Dated 31st March, 2021
OFFICE MEMORANDUM
Subject: Clarification regarding full and final settlement of bills/claims pertaining to LTC Special Cash Package Scheme.
The undersigned directed to refer to point no. 11 of FAQ-1 of this Department issued vide O.M. of even No. dated 20th October 2020 and point no. 1 of FAQ-4 issued vide O.M. dated 10th March, 2021 clarifying that “as far as possible, the claims should be made and settled well before 31st March, 2021. Ministries/Departments may consider settlement of only those claims/purchases made on or before 31st March, 2021 beyond the due date, i.e, 31st March, 2021”.
2. In this regard, it stated that queries are being received in this Department with respect to purchases made upto 31st March, 2021 (including on-line purchases) and submissions of bills/claims and settlement beyond 31st March, 2021. Keeping in view of practical difficulties in submission of bills/claims for purchases made particularly in late hours of 31st March, 2021 (including on-line purchases), it is clarified that submission of bills/claims may be entertained and settled by Ministries/ Departments not later than 30th April 2021. However, it is reiterated that the payment for the purchases should be made not later than the due date i.e. 31st March, 2021.
3. This issues with the approval of competent authority.
(Prateek Kumar Singh)
Dy. Secretary to the Government of India
9. Clarification regarding full and final settlement of bills/claims pertaining to LTC Special Cash Package Scheme
No. 12(2)/2020-E.II(A)
Government of India
Ministry of Finance
Department of Expenditure
……..
North Block, New Delhi
Dated 7th May. 2021
OFFICE MEMORANDUM
Subject: Clarification regarding full and final settlement of bills/claims pertaining to LTC Special Cash Package Scheme.
The undersigned is directed to refer to this department OM of even no. dated 31st March 2021 clarifying that submission of bills/claims with regard to LTC Scheme may be entertained and settled by Ministries/Departments not later than 30th April 2021.
2. Queries have been received in this department to extend the date for submission of bills/claims and settlement beyond 30th April, 2021. Keeping in view of the situation existing due to Covid-19 pandemic, it has been decided that submission of bills/claims may be entertained and settled by Ministries/Departments not later than 31st May, 2021. However it is reiterated that payment for the purchases should have been made not later than the due date. i.e. 31st March 2021.
3. This issues with the approval of Finance Secretary.
(Prateek Kumar Singh)
Dy. Secretary to the Government of India
Download Clarification regarding the full and final settlement of bills/claims pertaining to LTC Special Cash Package Scheme dated 7.5.21 in pdf format
10. CBDT Press Release dated 29.10.20 extending LTC Cash Voucher Scheme to private sector employees
Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 29th October, 2020
PRESS RELEASE
Income-tax Exemption for payment of deemed LTC fare for non-Central Government employees
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.
2. 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-EII (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.
3. In order to provide the benefits to other employees (i.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.
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:-
(a) 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 the12th 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-EII (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.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Download CBDT Press release dated 29.10.2020 extending the benefit of the LTC Cash Voucher Scheme to non-central government employees in pdf format
Read Also on LTC Cash Voucher Scheme:
FM Announces tax-free LTC Cash Vouchers, Special Festival Advance and Other Schemes to Boost Demand
Tax Exemption on LTC Cash Voucher Extended to Private Sector Employees
Is LTC Cash Voucher Scheme Beneficial for Private Sector Employees
57 Comments
I hv a queryabout clarification given by ministry about insurance .
ReplyDelete"The special cash package envisages just of purchase of goods and services with GST of 12% and above made during the period between 12.10.2020 and 31.03.2021. Payment of premium of existing insurance policies does not fall under this category.
However, payment of premium for insurance policies purchased during the period between 12.10.2020 and 31.03.2021 is eligible for reimbursement under the scheme."
My doubt is weather car insurance renewal premium done in December 2020 or January 2021 will fall under benefit of LTC policy or not?
Because existing insurance policy may be termed for existing{ life or health policy} which continues for a certain period of years vid definite premium but in car renewal insurance, every year we make a new purchase and consequently concerned insurance company give new insurance document , new policy number moreover every year we may change car insurance company.
Pls. Clarify
It appears that the intent of the scheme is to allow the exemption for a fresh purchase of insurance policy and not for renewal of policy even if the policy number changes and expires after a fixed term. It is still a continuation of earlier policy. This is what I inferred.
DeleteIf I'm having a health insurance for 5L earlier and during renewal of the policy I've increased the sum insured to 10L and accordingly the premium amount got changed. In this case whether it will be treated as existing or new policy? Can LTC availed in this scenario?
DeleteCan we buy gold bonds with this new ltc cash voucher scheme?
ReplyDeleteNowhere in gold bonds, gst rate is written. Hence will not be beneficial for LTC scheme
ReplyDeleteGST on physical gold is 3%. So it is not covered under this scheme.
DeleteCan we purchase gold ornaments to avail this scheme ?
DeleteBike purchased on Loan,then is it necessary to clear or pay entire EMI within 31/03/2021 or not.pls clarify
ReplyDeleteWhich insurance policY chargeS 12% and above GST?
ReplyDeleteAs per icici pru portal
All life insurance policies can be used which are newly purchased between 12th Oct 20 to 31st Mar 21. But I don't think gst will be 12% and above for these policies.
For term and health
ReplyDeleteinsurance the GST is 18%
As per earlier orders even if I am entitled for business class, was directed to travel in economy class because of financial crunch. Under this scheme whether I will get deemed fare of 20000 or 36000.
ReplyDeleteI have a doubt sir,
ReplyDeleteI purchased a item with cost of 50000/- using my friend credit card in November-2020 for instant cashback upto rs.1000/-from Amazon. I was transferred the remaining amount 49000/- to my friend account through UPI
am I eligible for reimbursement of the amount ?.
please reply me.
thanks in advance
It is clearly given in a faq that paying method like card for account should be of clearly indicating your name
ReplyDeleteWhere it is written? They said invoice should be in his name
Deletecan i purchase tata rod for construction of house in future through ltc encashment scheme?
ReplyDeletein future means by 31.03.2021 and not after that
DeleteI haven a query that if I buy an traditional insurance policy or single premium annuity with GST of 4.5% & 1.8% can opt under LTC Scheme pls confirm
ReplyDeleteGST rate is less than 12% hence not applicable.
DeleteI HAVE PURCHASED THROUGH AMAZONE CAN IT IS APPLICABLE FOR DELHI GOVT EMPLOYES.
ReplyDeleteI have joined the service on 26 june 2012 , its a new recruitment ,so im comes under 8 years LTC block.
ReplyDeleteNow my 8th year LTC is exhausted on 31 DEC 2020.(In 8 years i have taken only one LTC On 2016).
now from 01 Jan to 31 Dec 2021 i dont have LTC ,
SO please clarify me that how can i avail this Special cash packege (LTC cash).
I had opted for new tax regime in April 2020.
ReplyDeleteI wanted to switch to old tax regime and I took up the matter with my employer. However, switching is not permissible as per my employer. I wish to seek your guidance on two issues.
(A). I plan to buy new car in Feb 2021 valuing approx. 15 Lacs. Will I be able to avail benefits under recently announced LTC cash voucher scheme, if I opt for old tax regime while filing ITR for AY 2021-22.
(B). While filing ITR, will I get refund of tax, if any, due to switching to old tax regime.
I sincerely request you to kindly guide me on these two issue.
You can opt for old tax regime while filing your ITR. If excess tax is deducted, you will get the refund.
DeleteYes car can be purchased to avail this LTC Cash Voucher Scheme provided you do not opt for new tax u/s 115BAC regime while filing ITR
Can this be claimed in FY- 2021-22, as in most of the private companies, the flexi benefit window is already closed. In other way if someone has declared any LTA component in his/her salary structure, how is he/she going to claim that.
ReplyDeleteNo, cannot be claimed for FY 2021-22 since the last date to avail the scheme is 31.03.2021
DeleteI m asking that I paid my installment recently for a shop in commercial complex and have receipt voucher which indicates gay breakage also.. Am I eligible for this scheme.
ReplyDeleteSir
ReplyDeleteI have purchased laptop at 9th october 2020 in cash, may i reimbursement as special cash benefit scheme (LTC).
No
Deletepurchase date is prior to 12 oct and in cash
Is LIC employees are eligible for LTC cash benefit scheme
ReplyDeleteyes
Deletei have purchased a New Jeevan shanti policy on 17 th Feb and it is a single premium defered annuity plan with a GST of 1.8% . COuld I get the benefit in the scheme .
ReplyDeleteNo since GST is less than 12%
DeleteSuppose my name is not mentioned in the invoice but I have proof of payment made digitally from my card. Is this can be claimed.
ReplyDeleteThanks
No
DeleteInvoices having GST 12% or more are in name of Family member and payment made by their cards. Can this be claimed?
ReplyDeleteIn my opinion, No
DeleteYes, but family members must be ur dependent
DeleteICICI website claims, 'All life Insurance policies purchased from October 12,2020 to March 31,2021 are eligible for the Leave Travel Concession (LTC) Cash voucher scheme'. This includes the traditional plans which take GST 4.5%. They argue that this GST is actually 18%, but as a special provision, one fourth of the premium is taxed (hence 4.5% of overall premium) for endowment plans. Hence these policies are eligible for LTC scheme.
ReplyDeleteThank you for the information.
DeleteSir,
ReplyDeleteI have made payment throught my father's debit card, but the invoice is in my name.(my father is not included in my family, as he is pensioner and not dependent on me). Can I claim it??
Thanks i. Advance ��
yes
DeleteCan i purchased gold ornaments to avail this scheme?
ReplyDeleteGold has 3% GST rate, so not eligible under this scheme.
DeleteIs the leave encashment amount granted under this scheme is taxable under income-tax?
ReplyDeleteThanks in advance. Can I buy homeopathic medicines for eligible amount as my expenses are on special prepared medicines by my doctor. 18 percent GST will be paid and mentioned in bill too.
ReplyDeleteAny product with GST of 12% and above can be purchased. There is no restriction on type of products.
DeleteWILL PERSON GET DEEMED AMOUNT MENTIONED IN THE LETTER OR AMOUNT OF HOMETOWN OR ALL INDIA TRAVEL FROM WORKING PLACE. KINDLY CLARIFY.
ReplyDeleteif i use my friends credit card and making online transfer to him, whether it will be considered for digital payment or not
ReplyDeleteRead this article
DeleteHi Sujit, my query is if I take the benefit of new insurance premium under LTC, will that affect my claim under 80C/80D? Can I claim under both LTC and 80C/ 80D? Thanks in advance.
ReplyDeleteYes, why not. There is no bar.
DeleteIf i purchase 4 items of gold and 12% gst of whole amount is deducted..then can I buy gold.
ReplyDeleteIn case of gold GST is 3%. Anyway, if your item attracts GST of 12% it will be eligible.
Deletei purchased an item by using my wife's debit card for LTC special package scheme.Can i claim it in the scheme?
ReplyDeleteYes, refer FAQ-Series 4
DeleteHi Sujit,
ReplyDeleteMy employer, a private company, stopped accepting LTC proofs from 28th Feb 2021 and i had made a purchase on 18th Mar 2021 but my employer is refusing to make any changes and record the LTC component. I have retained all the bills for this purpose.
Will I be able to claim LTC under 10(5) while filing ITR? Will there be a provision 2 under 10(5) this time round for LTC cash voucher scheme in ITR? If not 10(5) then under which section can i include LTC?
Appreciate your time & effort to advise.
It is unfortunate that when government is extending the benefit your employer is curtailing it. anyway, you can always claim the exemption in your ITR
DeleteSir, I made online purchase in my name during eligible period (12.10.2020 to 31.03.2021) through Amazon & Flipkart. Payment was made digitally through my friend/colleague's credit card. Is it acceptable under deemed LTC cash voucher scheme? If employer refuses to update in Form16, may claim the same during filing of ITR? Please clarify straight way without referring RFQ clauses. I am getting confused. Hope you will understand my problem & your reply will be a great help for me.
ReplyDelete