LTC Cash voucher scheme: Bill can be made in the name of spouse/ dependent too

Shishir Sinha New Delhi | Updated on November 07, 2020 Published on November 06, 2020

Finance Ministry relaxes norms for the scheme

The Finance Ministry has relaxed some conditions for LTC Cash Voucher Scheme and advised all Central Ministries and Department to ensure festival advance is given before Diwali.

“The invoice of the goods & services purchased as per the scheme may be in the name of spouse or any other family member who are eligible for LTC fare,” an office memorandum of Expenditure Department said.

Earlier it was said that the invoice — which is being submitted for reimbursement under the scheme — should be in the name of employee only.

Block year & GST

The LTC cash voucher scheme, announced on October 12, prescribes cash payment in lieu of one LTC during 2018-21, in which an employee, opting for the scheme will be required to buy goods/services three times the fare and one time the leave encashment before March 31, 2021. The good or services should be attracting GST at the rate of 12 per cent or more.

The scheme was initially announced for Central Government employees with expectation that State Government and private sector, too, will give the benefit. Later, the Income Tax Department provided income tax exemption to non-Central government employees (those belonging to State governments and private sector) similar to Central government employees.

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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 per cent from GST registered vendors / service providers through digital mode during the period from October 12, 2020 to March 31, 2021 and obtains a voucher indicating the GST number and the amount of GST paid. The payment of cash allowance, subject to maximum of ₹36,000 per person as Deemed LTC fare per person (Round Trip) to employees, will be allowed income-tax exemption.

Settlement of advance

There was another issue regarding settlement of advance taken under the scheme. Rule says that the advance taken should be settled within 30 days of the disbursal of advance. However, the Ministry said that since this is a special scheme which means rules relating to advance taken under LTC are not applicable here. It means the advance taken under the scheme will be settled on or before March 31.

In a separate Office Memorandum, Expenditure Department has requested all Ministries/Departments to ensure disbursal of pre-paid UTSAV Card (given as a part of festival advance) to employees well in advance before Diwali.

Under the Special Festival Advance, all Central Government employees will be eligible for interest-free loan of ₹10,000. This amount will be given as pre-loaded RuPay card and recovered in 10 equal instalments. The amount actually spent will be recovered while the balance will lapse after March 31, 2021.

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Published on November 06, 2020
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