1. The Government vide office memorandum no. OM No F. No 12(2)/2020-EII (A) dated 12th October 2020 announced the Cash Voucher LTC (Leave Travel Scheme) scheme for Central Government employees.
1.1 The Central Board of Direct Taxes issued a press release on October 29, 2020, to provide a similar scheme & income-tax exemption to non-central government employees, who were not covered by the 12 October Office Memorandum.
1.2 Non-central government employees include employees of state governments, public sector enterprises, banks, and the private sector.
1.3 Thus the LTC scheme & tax exemption is also applicable to employees working with the Private sector, Public sector undertaking (PSU) and State Government.
2. SPECIAL CASH VOUCHER LTC SCHEME AT A GLANCE: An employee is required to fulfill the following conditions to avail of the benefit under the scheme
(a) The LTC scheme requires employees to spend three times the amount of deemed LTC fare on the purchase of goods or services, having a GST rate of 12 percent or more;
(b) The amount must be spent during the period October 12, 2020-March 31, 2021;
(c ) The payment must be made through a digital mode which includes cheque, UPI, debit/credit card, etc., and required to furnish a copy of invoices to the employer containing GST number of the vendor and GST amount paid.
(d) The employees also have an option to submit a self-attested copy of the invoices in case they want to retain the original copies for their future reference.
(e) If conditions of the LTC scheme are met, the deemed LTC fare paid to the employees will be tax-exempt, certainly removing the condition of mandatory travel.
2.2 The details of special cash package scheme has been brought out in articles Special Cash Package Scheme In Lieu of LTC for Government Employees & An Overview of Special Cash Package LTC Schem
3. TAX EXEMPTION FOR LEAVE TRAVEL ALLOWANCES (LTA) The government LTC is quite different from the LTA system being followed in the private sector or some of the corporate sectors . In such organizations, the employers generally provide LTA to employees for travel expenses as part of their compensation structure.
3.1 The company pays to leave travel allowance irrespective of the fact whether the employee can travel or not during the year. The exemption is allowed where an employee takes leave to travel within India and furnishes evidence for the same, subject to fulfillment of conditions prescribed in the Act. In case the proof for travel is not produced, such an amount is then considered as taxable perquisites subject to TDS (tax deduction at source).
3.2 As recently clarified, based on FAQ no.3 dated November 25, it is not mandatory for an employee to opt for leave encashment. The employee can avail this scheme utilizing the applicable LTC fare without opting for leave encashment. Further, even though leave encashment is not opted for, the employee will have to spend 3 times the deemed LTC fare.
3.3 The implications would be no different under the LTC voucher scheme. Instead of incurring expenses on travel, the employee can now furnish proof for purchases made / services availed and avail of the tax exemption.
3.4 The tax exemption will be restricted to the deemed LTC fare of up to a maximum of Rs 36,000 per person for a round trip as for non-central government employees, the cash allowance payment of a maximum of Rs 36,000 per person as deemed LTC concession fare, is permissible
4. ILLUSTRATION:
| (a) | Mr. A is an employee of a corporate sector under the LTA scheme | |
| (b) | LTA amount based on salary structure is | Rs 1,50,000 |
| (c ) | Eligible Family Members (as per Income Tax LTC Rule) | 4 |
| (d) | Maximum benefit (36000*4)
The guidelines of the LTC scheme for non-central government employees provide a maximum benefit of Rs 36,000 per person. |
Rs 1,44,000 |
| (e) | Amount need to spend on purchases as per the specified scheme (3 times of deemed fare (maximum benefit)) = 144000*3 |
Rs 4,32,000 |
| (d) | Taxable LTA amount (1,50,000 – 144,000) Subject to condition that Mr. A spend Rs 4,32,000 for specified purchases | Rs 6,000 |
| (e) | LTA Exemption in case of less amount spent on the purchase Suppose Mr. X purchases only for Rs 2,00,000/- LTA exemption will be proportionately reduced (144000/432000*200000) | Rs 66666 |
| (f) | Taxable LTA in case of less amount spent on the purchase (150000-66666) | Rs 83334 |
Disclaimer: The interpretation of the provision and strictly the author’s view and for informational purpose only. It does not constitute professional advice or recommendation for claiming LTA exemptions
The author can be approached at caanitabhadra@gmail.com
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If vehicle (GST 28%) bought in EMI’s and only 15% upfront payment made by Employee. How much amount is eligible for calculation of LTA exemption. 15% – the payment made by Employee, or
100% of the invoice value
I have following Quarry pertaining to LTA claim policy for Private sector employees.
1. Is the purchase of new Insurance eligible under Good and Services for LTA tax exemption?
2. Why Renewal of Insurance not eligible for LTA tax exemption?
3. From where I can get the Government circular where it mention that which Goods and Services eligible for LTA tax exemption.
4. Recently I travelled in India by Air alone. Can I produce this ticket for LTA tax exemption under this new policy?
5. My company has FBP scheme can I produce same bills for availing tax exemption under LTA?
6. I have taken membership in professional Institution like Institution of Engineers. Will the membership fees is eligible?
7. The lockdown period was from 22nd March 21 but the Govt has made the scheme applicable from 12th Oct 21. Most of Goods and Services purchase through online was done during the lockdown period.
8. Will the School fees paid through Cheque eligible. Not claiming under section 80C
Can I claim payments for demand letter raised by builder to construct my flat.
I have made an eligible purchase in Jan 2021, but my LTA was received in May 2020. Hope i can still claim the benefit of the purchase
Is LIC employees are eligible for LTC cash voucher scheme
Can we claim travel bills and 12% above gst bills both to claim the LTA exemption being an unmarried person?
Can medical services like Lasik eye surgery be considered for exemption. It comes under 18% GST?
my employer provides half basic every year(jan-dec) for LTA. i have taken lta half basic amount in jan 2020 on which i have paid income tax.
now i have taken lta in jan 2021 i.e half month basic for block year 18-21. can i take benefit of this scheme as earlier received lta amount was taxable
1) In my salary slip, it’s showing Rs. 15K per month as LTA component.
I’ve a wife, child and both parents as my dependents. Now how I can calculate the deemed LTC to be spent.
2) Currently, the last date for submitting LTC proof is 18th Feb but I don’t think I can make it.
So, can I claim this during Income tax filling?
Thanks
1) In my salary slip, it’s showing Rs. 15403 as LTA component.
I’ve a wife, child and both parents as my dependents. Now how I can calculate the deemed LTC to be spent.
2) Currently, the last date for submitting LTC proof is 18th Feb but I don’t think I can make it.
So, can I claim this during Income tax filling?
Thanks
Hi,
I purchased 2nd hand car on 7th Nov and the car was originally registered on 21-Aug-2020.
I paid 1st car owner thru bank transfer and also I paid road tax but by the cash.
In this case, I cannot claim LTC as original Invoice is with 1st car owner’s name and I paid life time road tax (14.33%) but road tax doesn’t come under GST.
Is my understanding correct?
Thanks
I want to purchase a car (GST 28%), will this will be considered under LTC cash voucher exemption?
Second, in my organisation, tax proof submission window is closed and my car will be delivered on 20th Mar.21. My tax on LTA will be deducted, in this case shall I claim the exemption while filing my return for AY 2021-2022 (FY – 2020-21).
Will be grateful, if you please clarify.
Best Regards
My employer doesn’t allow me to declare LTA now for FY21 (should be done in Apr’20) and hence I cannot submit the bills for FY21 (Oct-Mar21). Is it possible I can make LTA declaration in Apr’21 and submit these bills in next year. I haven’t availed LTA in any of the last 4yrs.
Hi,
My eligible LTA for annum is 35,000. My family is of 4 members i.e., (36000 * 4 = 1,44,000) and Amount spend needed is (1,44,000 * 3 = 4,32,000), Where as I have bills for Inverter, Refrigerator and others @ 18% is around 1,00,000/-. Now that I am entitled to get Tax benefit = (1,44,000 * 1,00,000 / 4,32,000) = 33,334 INR. Is the calculation correct ?
If I make payment from Amazon Pay Balance, would it be considered for Special LTA?
Can I claim for my son’s Couching Institute Fees which incur GST ? Also, Medical Insurance ?
Can even the grocery items bills on which GST is charged more than 12% be used for LTA cash claim benefits
Hi, I am working in private sector and LTA component is Rs. 36000/-per yr which is part of CTC. My family is of 3 members. what will be the maximum exemption I can avail under this Ltc cash voucher scheme?
Can one claim LTA for the purchase of Equity stocks / Mutual Funds and Sovereign Gold Bonds through a authorized stock broker between Oct 12, 2020 – Mar 31, 2021?
Hello mam,
We bought few goods during this period however the amount was paid from my spouse bank account.My company is asking for bank account statement for confirmation of purchase.So should the account and invoice should be same persons name inorder to avail benefit or dependant bank account numbers are fine?Pls clarify
Do we need to submit 36000*3 amount bills each in name of self and spouse separately? or can combine total amount(108000+108000) and produce single bill?
Hi ,
I wanted to claim LTA for a travel made by me and family (kid + spouse) for a 3 week time period.
Out of the 3 weeks , I was on leave for first two weeks and Working from home in the last week.
Would I be able to claim LTA for both the sides of air travel.
Thanks
I have opted for new regime taxation option. Can I avail the benefit of LTC cash scheme.
I am working in private company and have LTA component in ctc. My employer tax consultants are not considering 12% or above gst goods for claiming LTA, stating that there is no official statement from tax authorities and the statement were only press release. They also confirmed this from pwc
Very Informative and simple to understand.
Can doctor prescribed medicines whose GST come 12% and above be claimed under LTA by private company employees ?
Max LTA allowed as per CTC is 1,20,000
Considering 36000/family member and family of
including myself = Amount is 108,000
I have to spent 3 * 108,000 = 324000 to get full exemption on Rs 1,08,000 as 12000 would be taxable
So if in 20% bracket, then effective maximum savings would be 20% of 108000 = 21600.
Please confirm
I have changed my employer in the November Month. I have not claimed my LTC benefit from my previous employer. I have a purchase bill with a GST of more than 12% dated 20th October. So, can I claim LTC for the same bill from my new employer? If the answer is yes, then will my eligibility will be considered based on the new employer’s LTA amount or both (previous + current) employer’s LTA amount?
Please, reply
Can jewellery purchase can be claimed under Deemed LTA
Hi Anita,
I have bought a flat and paid 12% GST. What kind of GST invoice is needed to claim LTC? and could you help with the list of documents required other than that?
A very nice Article Anita ji, very informative and insightful. One query, if I have family member of 4 then total eligible amount is 1,44,000 and purchase amount should be 432,000. Is this purchase of 432,000 can be in name of 1 person or should be divided equally?
Very informative article, Anita ji. One question. If in an invoice, taxable value is Rs. 10,000 on which GST@18% = Rs. 1,800 is charged making the bill total Rs. 11,800.
Then for the purpose of calculating the eligible amount, whether Rs. 10,000 is considered or Rs. 11,800?
On Mobile purchase statement, CGST is mentioned as 9% and SGST is mentioned as 9%. Can it be considered as 18% GST and applicable for LTC?
I want to buy four wheeler to the value of around seven lakhs and cash will be paid for three lakhs and remaining through EMI. Can i avail the exemption in LTA for the cash paid?
This is confusing , what if someone does not want to make any purchase or travel. what tax one has to pay to get the accumulation against the block.
In context of Private employees, to avail the benefit , can we buy goods in name of spouse and what is maximum limit , is it for 4 persons only or 6 persons including dependent parents. i. e 36000* 6 or 36000*4.
To avail the benefit , can we buy goods in name of spouse and what is maximum limit , is it for 4 persons only or 6 persons including dependent parents. i. e 36000* 6 or 36000*4.
Can I buy goods in name of spouse to claim this benefit. Is the benefit restricted to 4 persons only or including parents, it can be 36K *6
Hello Madam, This is very insightful article. One query if pvt sector LTA eligibility per salary stack is less than deemed LTC for family, does the employee still eligible for full deemed LTC exemption if expenses done are 3 times deemed LTC limit with 12% GST and between 12 oct 2020 and 31 mar 2021
Very useful article, Mam. Thanks for clarifying many things. Any list of name of Policies (LIC/Private) that can be availed with single payment mode to get full benefit of the scheme….any links to that list will be highly beneficial to Private sector employees. Thx
Hi,
Can i purchase gold and claim LTC??
Hi, Can i purchase gold and claim LTC??
Hi,
Can I avail the cash voucher LTC against International Travel booking given it attracts more 12% GST.
If, yes then can this be valid for booking made in this FY for travel in next FY. eg. booking done in Jan for travel in Apr
Regards,
Prashant
Can I claim payments for demand letter raised by builder to construct my flat.
Can the purchases of electronics gadgets like mobile, TV from online (Flipkart/Amazon) be also considered? Can I submit those bills to show purchase?
And also if I have actually traveled and have invoices can that also be claimed?
Please advise..
Hi,
Can normal Mobile and telephone bills be claimed under the scheme? In case of prepaid, there is a recharge done so only receipt generated, since GST applicable on Telecom is 18% can the recharges done be claimed?
If Private company find difficult to implement this new LTA announcement because of very less time now.
In that case an individual can file the same in ITR and can get the benefit amount returned from income tax department or not.
Could you please answer this
Have a any concession of income tax for leave encashment for special cash package scheme as per govt. scheme on 12-12-2020
Dear Madam,
I had purchase four wheeler in Oct.20. Though dealer invoice date is 11.10. 2020 but RTO temporary registration date is 13.10.2020, Whether I can claim this invoice for LTC claim for FY 2020-21.
Please reply.
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