- CA Anita Bhadra
- | Finance - Articles
- 13 Oct 2020
- 40,041 Views
- 125 comments
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 |
Rs. 54015 | |
| (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.
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Maam,
1. I have availed LTC-177A in the yr of 2020 Nov, since 2018 – till Oct 2020 I haven’t availed any form of LTC, am I eligible for this scheme?
2. if i wanted to avail LTC 177A in current year (Nov/Dec 2021) is it violates any rule of this scheme?
3. Please confirm………Regards
mam, will payment of online classes or webinar with GST of 18% fall under this plan?
Since there is no specific exclusion of such services, in my view, the payment to attend the fee for the webinar where GST is more than 12% shall be covered under the scheme
I have joined in 2020 in government service. Can I take benefits of this ltc cash voucher scheme.
Leave is mandatory to avail Leave Encashment??
If you do not have leave, you can claim benefit only to the extent of eligible fare.
It is not mandatory to avail the benefit of leave encashment
I have availed 2014-2017 (extended year 2018) LTC to all india. Can I avail this scheme(LTC special cash package) against my 2021 LTC using bills from 12 oct 2020 to 31 march 2021. Please clarify
Yes, You can avail, subject to other conditions i.e digital mode of payment, etc
i have three children can i elegibale for ltc…there are any rules for children in ltc…plz reply
Mam, my joining date in government service is 16/10/2015.
Can I avail new LTC cash voucher scheme?
Pls reply fast mam.
Can we apply bill against an online course registered in platforms like Upgrad / Udemy etc?
The courses have GST of 18%.
I am a new recruit joined in Aug 2018. Can I avail LTC special cash package scheme in lieu of Home Town LTC of year 2020 now in Feb 2021. Do I have some document making me eligible for this as my institute says that I should have taken prior approval for the same before 31st Dec 2020.
I just want yo know whethr i have to show any flight tickets or boarding passes to claim flight tickets …as i already availed 60days leave bt not claimed any ltc
In case, you wish to avail of tax exemption against LTA paid to you or against a special voucher in lieu of LTC, you need to submit tickets /invoices of your purchase to your employer.
But my employer says that you had to raise the application before 31st Dec 2020 if you want to claim LTC for 2020. DO we have any document to prove that we do not require prior approval for Special Cash Package.
Is it necessity to raise the LTC application before 31/12/2020 to avail the LTC cash purchase scheme for the block 2018-2020. As I understand, as the claim settlement is within 31st March 2021, is it permissible to apply for the block 2018-2020 , even in the prevailing first quarter of 2021
Yes
It is permissible to apply till 31st March 2021
Is it necessity to raise the LTC application before 31/12/2020 to avail the LTC cash purchase scheme for the block 2018-2020. As I understand, as the claim settlement is within 31st March 2021, is it permissible to apply for the block 2018-2020 , even in the prevailing first quarter of 2021
Please tell me if Level 6-8 as per 7th CPC will be in category of “Employees who are entitled to economy class of airfare”(Rs. 20000/-) or in Rs. 6000/- in respect of scheme (spl cash pack in lieu of LTC BLK yr 2018-21).
Sorry, I am not aware of the entitlement as per employees’ grades in the Central Government organization.
Madam,
I purchased car in the month December 2020, but I made payment through cheque whether it is permissible or not to avail special package LTC. Kindly give me the clarification madam. Tq
Yes, it is permissible
The cheque payment is a digital mode of payment
Madam,
I purchased car in the month December 2020, but I made payment through cheque whether it is permissible or not to avail special package LTC. Kindly give me the clarification madam. Tq
Yes
It is available. Cheque payment is considered a digital mode of payment.
Shall I use LIC policy with one time premium with GST more than 12% and avail the special package?
Renewal of Insurance policy is not covered under the scheme, however, a benefit of the scheme can be availed for purchase of new insurance policy ( as clarified in one of the FAQ released by the department)
Sir/Mam I have availed 2020 LTC for hometown. Can I avail this scheme(LTC special cash package) against my 2021 LTC using bills from 12 oct 2020 to 31 march 2021. Please clarify
No
You cannot
Please suggest
On the basis of my pay scale and number of members I am eligible to get Rs129000/- including leave encashment and fair. And I have to spent minimum Rs. 329000/-
My question is. If I want to purchase a small car than can I down payment 150000/- only and rest on auto loan?
Since the government clarified that EMI for purchases in installments is covered under the scheme.
In my view, you can avail the benefit of the car purchase in installments
Can any one give option/intimation for this special LTC Scheme on or after 01/01/2021 to avail the Block Year 2018-19 (extended upto 31/12/2020) since the Block year 2018-19 has lapsed on 31/12/2020. Plz clarify.
You can avail benefit against any ONE LTC in a Block of 2018-21 till 31st March 2021.
Thus even purchases in January are covered under the scheme.
In Ltc spacial cash package scheme is it compulsory to payment through own account/card. Can I make payment through friend/relative credit card.
Madam, I had bought a term insurance around May 2020. Can this service be used for LTC?
No
Purchase shall b between 20 oct ( date of office memirandum) and 31st March 2020
Can I purchase a bike paying cash instead of through digital mode under special LTC cash scheme
No
Payment through digital mode is a mandatory condition for the scheme
Deemed fair for pay matrix label-5
Madam,
Suppose I make (advance in digital IMPS) down-payment for house purchase and will get loan on balance amount by banks. I also pay registration fees to Govt. during registration of property. Will any of these be eligible for LTC cash voucher scheme?
refer to my article for FAQs and clarification by the Department
https://taxguru.in/corporate-law/overview-special-cash-package-ltc-scheme.html
An Overview of the Special Cash Package LTC Scheme
mam,my joining date in govt service is 05/10/2018.
can i avail new LTC cash package scheme?
Yes – For further detail refer to my article:-
https://taxguru.in/corporate-law/overview-special-cash-package-ltc-scheme.html
An Overview of Special Cash Package LTC Scheme
Madam,
Suppose I am making (advance in digital IMPS) down-payment for a house purchase and will get loan for balance amount. I also pay registration fees to Govt. when registering my property. Will any of these be eligible for LTC cash voucher scheme?
Madam, Payment for LTC buying goods can be done by own credit card or not
The mode of payment is not restricted. The invoice should be in the name of the employee/dependent eligible for LTC.
I brought a laptop after 12 oct. The invoice is on my name but I have used friend’s credit card to pay to vendor in emi (6 months till March 21) and later I am paying the emi to my friend by NEFT every month. Could I claim deemed LTC?
My employer says the payment to vendor should be through my debit or credit card. Is it so?
Respected Madam,
I purchased car in the month of Dec,2020 , so can i submit the invoice of the car to the office to avail special package LTC.
Yes, You can submit the invoice
Hi,
I am looking to purchase car in wife’s name. Can she make payment for the purchase from her account? She is eligible for LTC in service records.
Yes, you are eligible for the benefit of the scheme for the purchase of a car by the family member entitled to LTC benefit
Can we purchase gold for my spouse in lieu of LTC ?
You can purchase any goods subject to the condition that the GST rate should be 12% or above.
The invoice can be any of the family members who are dependent and eligible for LTC
Can I avail the cash voucher LTC scheme if the invoice for goods purchased is in the name of my unemployed brother?
In my view, the brother ( irrespective of his employment status ) is not considered as dependent and eligible for LTC.
Not eligible for the scheme.
is amount of Leave Encashment along with deemed LTC fare under LTC cash voucher scheme taxable?
Not taxable to the extent of amount spend under this scheme
Sir/mam can I purchase a car on the name of my unmarried daughter.Pl.let me know
The invoices of the goods and services purchased as per the scheme may be in the name of a spouse or any family member who is eligible for LTC Fare.
I’m a new recruit. I don’t have enough EL to avail leave encashment. Am I eligible for this special package scheme ? If yes, Will I face any kind of deduction in the entitled amount?
Yes, You are eligible for the proportionate amount
So Sir I will get the whole entitled amount without any deductions right ? Another query is if I purchase some item under my name (including invoice) but I use someone else’s credit card for payment then in that case will I get the entitled amount ? I want to buy laptop but offers are available only on specific cards. Thank you
Suppse I am going to purchase a new car through bank loan in my name @ 18% GST, whether this may be considered under the requisite expenditure criteria of the Special Cash package of LTC and invoice may be utillise fo sttlement claim or otherwise.
In my view, GST is not applicable to the loan amount
Mam, Can I buy holiday package from Club Mahindra which fetches 18% GST for availing Cash Voucher LTC.
Any goods or services are eligible subjects to the condition that the GST rate is 12% or more
I want to buy a car in February 2021. Then if I opt the LTC Block year 2018-20 in the LTC special package, will it be reimbursed as i will submit bills after Dec 2020 only?
The scheme is applicable for expenditure till 31st March.
In my view, you can avail of the benefit till 31st March
Can I take benefits on tax exemption for expenses on medical treatment incurred on my senior citizens parents.
In my view, the scheme can be availed for any goods or services subject to the condition that the GST rate on that goods/services shall be 12% or more
Can I avail this schem without taking advance and directly submit my bill before 31st March 21.
Yes, You can do that
Respected Sir,
Pls clarify to me how much family member are entitled for LTC special cash package and same where is mentioned. On urgent basis please
Regards,
In my view, it depends on your normal entitlement for the LTC scheme ( As per HR policy )
No such limit has been prescribed by the Government in this scheme.
Will an investment in an ULIP scheme be eligible
I want to avail this scheme without leave encashment. Is it possible
You can take benefit without availing leave encashment benefit. proportionately amount will be reduced. Clarified vide memorandum dt 20 Oct 2020
https://doe.gov.in/sites/default/files/Special%20Cash%20Package-LTC.pdf
Refer to Q1 of the clarification :
https://doe.gov.in/sites/default/files/Special%20Package%20LTC%20Clarfication.pdf
Can I buy gold biscuits and make use of this scheme?
I have a wife and two children of 9 years and 6 months. How many family members will be counted for calculation of LTC encashment?
4 Members
Thankyou madam for your objective reply.
Sir, I want to avail LTC special scheme only for part of my family members. Without employee as me, if LTC new scheme sanctioned with 10 days encashment. Pse confirm.
I have applied for sanction of this scheme.. can I purchase the article prior to sanction from my office?
Hello ,
My baby is 7 months old…. So i count him…
I entitled for 6000/- each category.
Sorry, I did not get your query.
LTC entitlement will be as per the HR policy of your organization.
In this scheme, you will get an eligible amount in lieu of LTC subject to the conditions prescribed
Can I finance car (completely) against this ltc scheme
You are eligible for the purchase of any goods and services for which the GST rate is 12% or more.
Is that essential for when I will bought a product on LTC before intimatated to my office.. Please confirmed me.
You need not to inform but submit the invoice to your office before 31st March 2021
I have already availed and claimed LTC for other than home town for the block 2018-2021 in Dec 2019. My case is closed too. But this new DOPT made me confused? Do I need to submit the form A and form B to get back restored, EL and EL encashment?
This scheme is optional and in lieu of the LTC Scheme. If you have already availed, nothing is required to be done
क्या अपनी कार का insurance करवा सकते है एलटीसी क्लेम मैं
Any goods or services on which GSt Rate is more than 12% is eligible for the scheme .
Insurance kerwa saktein hein agar insurance service per GST Rate 12% se jyada hein toin
Madam,
in this package, will there be deduction of 10 day earned leave from my balance leave in lieu of leave encashment?
You can take benefit without awailing leave encashment benefit . proportionately amount will be reduced . Clarified vide memorandum dt 20 Oct 2020
https://doe.gov.in/sites/default/files/Special%20Cash%20Package-LTC.pdf
I have hometown LTC unutilised, the block year ending during December 20. If I’m buying a car for which final invoice will be issued by the supplier during Feb’21 or Mar’21 only whether I am eligible for reimbursement?
Whether we can pay through Credit Card of Spouse of Govt. Servant for availing speical cash package in lieu of LTC.
In my view, the invoice shall be in the name of an employee. There should not be any problem as regards the mode of payment by Spouse’s Credit Card.
Those who are non entitled LTC by Air but they can avail LTC Port Blair in lieu of Home Town in bifurcation Delhi to Kalcutta by train and Kolcutta to Port Blair by Air. In this case how to calculate the claim. Please clarify;
Deemed fare has been fixed in three categories based on entitlement :-
Entitled Business class Rs 36000
Economy Class Rs 20000
Train Class Rs 6000
If, any employee buy cement for construction purpose. Can he take advantage of this scheme in this situation?
Yes
One can purchase any goods
If one would like to avail LTC surely the person can avail LTC rules of LTC should be applicable. If some one would like to avail Cash Voucher LTC (Leave Travel Scheme) in this case Leave encasement and deemed fare rules applicable to them. Else, a portion of family member can avail LTC and some may partly avail Cash Voucher LTC (Leave Travel Scheme). For example if an employee has four members in his/her family, then 2 may avail LTC and 2 member can enjoy Cash Voucher LTC (Leave Travel Scheme). For LTC shortest distance and permissible fare as per level of pay scale should be applicable here as per extant LTC rules. Thanks.
Madam,
Those are non entitled for air fare but they are availing home town in lieu to Port Blair. How would be calculated the their reimbursement (either as per deemed fare mentioned in circular Rs. 6000/- or as per bifurcation by Train upto Kolkata and by air Kolkata to Port Blair). Please clarify;
1) If my dependents only, goes in a journey ( Air / Train/ Road) then in that case tickets or invoice containing details of tax will have name of my dependents only and not in my name.
2) Any professional course (e.g. music, games & sports, computer related, etc.) purchased for dependents containing their name?
3) Health and term Insurance purchased on other’s name ( may or may not dependents)?
In all the above cases although payment may have been done digitally from my account, whether they will qualify?
It is clarified vide Q No.12 of clarification dated 20 Oct 2020 that invoice shall be in the name of the employee only
Refer following link:-
https://doe.gov.in/sites/default/files/Special%20Package%20LTC%20Clarfication.pdf
Condition for availing Cash Voucher LTC (Leave Travel Scheme are as follows: (i) You should buy goods and services which might attract >12% GST. (ii) Payments must be in Digital mode. (iii) Must be in the name of the persons who are entitled for LTC with you only. Thanks.
Can I purchase gold?
The rate of GST on the item purchased shall not be less than 12 % which is not in the case of gold.
Mam
Please explain the following:-
1.Is leave encasement mandatory if i opt this scheme?
2.if leave encasement mandatory then will it cut my opportunity of leave encasement 5 times in job?
An individual need not to take leave for availing the benefit. Reimbursement will be proportionate to the total amount eligible.
Refer to Q1 of the clarification :
https://doe.gov.in/sites/default/files/Special%20Package%20LTC%20Clarfication.pdf
What items purchase in leu of LTC.Can I purchase bike or scooty?
You can purchase a scooter, bike, or any other item. The only condition is that the GST rate shall not less than 12% and purchase from a GST registered vendor.
madam,
Thank you for the article,I am under the impression that there is no upper limit on the amount spend, but one question is that leave encashment has a upper limit of 10 days , so will that be the max amount that will be granted under the leave encashment or the corrosponding percentage is given irrrespectively?
The reimbursement will be equal to 10 days leave encashment amount & eligible fare.
The amount needs to spend shall be three times of fare + 10 days leave encashment amount.
Reimbursement will be proportionately reduced in case of less amount spent.
What items we can purchase in lieu of LTC. Can we purchase AC & Furniture?
Sir
Any item subject to the condition that GST Rate on that item shall be 12% or more
mam, services includes installation of modular kitchen
Sir
Any services subject to conditions :
The service provider shall be GST registered
GST Rate – 12% or more &
payment – Digital Mode
Can I claim this benefit if bill is in the name of depend not employee ?
Sir
In my view, the invoice should be in the name of the employee only.
I would like to inform that I have availed LTC to anywhere during February, 2020. I am entitled to avail LTC to HomeTown for the block year 2018-21. But since scheme is from 13th October till 31st March 2021. So can i apply for the LTC to hometown to aval this special cash package scheme…
Sir,
Sir,
In my view & to the extent details available in the Office memorandum, the scheme is applicable for all those eligible for All India LTC for the 2018-21 block.
Details are awaited to confirm whether applicable for pending home town LTC or not.
This is quite well explained, Anita. Thank you.
Thank You Sir