1. The Government vide office memorandum no. F.No. 12(2)/2020—EH(A) dated 12 October 2020 announced the Cash Voucher LTC (Leave Travel Scheme) scheme for Government employees.
2. What is LTC Scheme? The Leave Travel Scheme is assistance received by the employee from his employer for traveling on leave. The employee and family can visit anywhere in India once in a block of 04 years. The current block period is 2018-21.
3. An employee can avail leave encashment for a maximum of 10 days during the period he avails LTC The leave encasements are payable on Basic pay + Dearness Allowance as on commencement of LTC.
4. In view of the Covid-19 pandemic and resultant nationwide lockdown as well as disruption of the 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.
5. With a view to compensate and incentivise consumption by Central Government employees thereby giving a boost to consumption expenditure, it has been decided by the Government that the cash equivalent of LTC, comprising Leave Encashment and LTC fare of the entitled LTC may be paid by way of reimbursement.
6. Conditions for reimbursement: The cash equivalent of entitled LTC Fare and leave encashment will be given to the employee subject to the following conditions:
6.1 The employee spends an amount equal to the value of leave encashment and an amount 3 times of the cash equivalent of deemed fare, on purchase of items or avail services.
6.2 The item purchase or services availed shall carry a GST Rates not less than 12%.
6.3 Such purchase shall be from GST registered vendors/service providers through digital mode
6.4 The employee shall obtain a voucher indicating the GST number and the amount of GST paid.
7. Deemed LTC fare: – The deemed LTC fare for this purpose is as follows:-
|Sl||Category of employees||Deemed LTC fare (per person Round Trip)|
|(i)||Employees who are entitled to business class of airfare||Rs. 36,000|
|(ii)||Employees who are entitled to economy class of airfare||Rs. 20,000|
|(iii)||Employees who are entitled to Rail of any class||Rs 6000|
8. Illustration :
The Basic Pay of an employee is Rs 1,38, 500 per month, and has a Family of 4 eligib1e for economy c1ass Air travel. The present DA rate for central Government employees is 17% of Basic Pay.
|(a)||Calculation of Leave Encashment:-
( Basic + DA)* No. of days leave enchased/30 (138500+23545)*10/30
|(b)||Fare Value (assuming entitled for economic class) 20000*4||Rs 80000|
|(c )||The employee needs to spend 3 times of notional fare (80000*3)||Rs. 240000|
|(d)||Total amount to be spent for full cash benefit ( a+c)||Rs. 2,94,015|
9. 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.
9.1 In case the employee spends fare amount only, Rs. 2, 40,000 in the above example, the total amount payable will be calculated as follows:
|(a)||Calculation of % of leave encashment to the total amount to be spent||(54015/294015) * 100||18%|
|(b)||Calculation of % of fare amount to the total amount to be spent||(80000/294015)*100||27%|
|(c )||Proportionate amount payable : 3 times of notional fare * % of leave encashment||2,40,000* 18%||Rs. 43,200|
|(d)||Proportionate amount payable : 3 times of notional fare * % of fare amount||2,40,000*27%||Rs. 64800|
|(e)||Total amount payable ( c+d)||Rs. 1,08,000|
10. Other Salient Features of the Scheme:-
10.1 Optional Scheme:- It is not mandatory for an employee to opt for the scheme. If opted, the reimbursement will be given as per the calculation above. However, in order to avail of this package, an employee should opt for both leave encashment and LTC fare.
10.2 Tax Exemption 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 LTD fare.
10.3 Advance Payment 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 the employee which shall be settled based on the production of receipts towards purchase and availing of goods and services as prescribed
10.4 Settlement of Claim The claims under this package (with or without advance) are to be made and settled within the current financial year.
10.5 Recovery on non-utilization: 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-utilization and recovery of an unutilized portion of the advance with penal interest
10.6 Effective Period 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.
The Author can be approached at [email protected]