Deemed LTC fare: Non-Central govt employees can avail tax exemption too

Our Bureau New Delhi | Updated on October 29, 2020 Published on October 29, 2020

Non-Central government employees availing cash equivalent of LTC fare — under a facility put together on October 12 – would get income tax exemption benefits as well, the Finance Ministry said on Thursday.

This would be on the lines of the tax exemption extended to Central government employees on receipt of deemed LTC fare.

Accordingly, the payment of cash allowance, subject to maximum of ₹36,000 per person as Deemed LTC fare per person (Round Trip) to non-Central Government employees, would be allowed income-tax exemption subject to fulfilment of conditions, an official release said.


The income-tax exemption to receipt of deemed LTC fare by a non-Central government employee would 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 equal 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 the 12th of October, 2020 to 31st of March, 2021 and obtains a voucher indicating the GST number and the amount of GST paid and (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, the release added.

In view of the Covid-19 pandemic and resultant nation-wide lockdown as well as disruption of transport and hospitality sector, a number of employees are not able to avail of Leave Travel Concession (LTC) in the current Block of 2018-21.

With a view to compensate Central government employees and incentivise consumption, thereby giving a boost to consumption expenditure, the government had allowed payment of cash allowance equivalent to LTC fare to Central government employees subject to fulfilment of certain conditions. It has also been provided that since the cash allowance of LTC fare is in lieu of deemed actual travel, the same would be eligible for income-tax exemption on the lines of existing income-tax exemption available for LTC fare.

Now, other employees (i.e. non-Central government employees) have also been covered under the tax exemption benefits so long as certain conditions are met.

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Published on October 29, 2020
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