Recently, the LTC Cash voucher scheme has been launched by the Central Government for its employees. The government employees will be able to purchase at a discount. The government now wants to extend such benefits to private sector employees as well. An outline for this is being worked out, as per the sources. Private sector employees will also be given tax exemption if they choose to purchase consumer goods with LTA amount and this is likely to be announced soon.
A top government official has said that plans are afoot to benefit private sector employees and the central government wants to encourage market buying in the wake of the Corona epidemic and that is why private sector employees would be allowed to buy like government employees. The central government’s math is that if government and private sector employees go out to buy, an additional consumer demand of Rs 28,000 crore will arise. However, buying by government employees is likely to generate more revenue.
This time the central government plans to give cash vouchers to its employees in LTC (Leave Travel Allowance). With the help of this cash voucher, employees will be able to buy non-food items to which at least 12 per cent GST is applicable. If private sector employees choose to buy consumer goods from LTA funds, they will also be entitled to tax relief.
Private sector employees will also benefit from the tax, a government official said. Plans are being made for this and an explanation will be released soon. The government wants to increase consumer demand in the Corona-affected economy through the scheme. That is why the government wants private sector employees to be part of it. The government estimates that this will create an additional consumer demand of Rs 28,000 crore.
Although LTA is exempted from income tax twice in four years for private sector. For this, employee has to submit the proof in terms of travel certificate / bills otherwise tax is deducted on this amount. The industry says it needs clarification on how private sector employees will benefit without changing income tax provisions. The opinion of tax experts is divided on whether the government will issue a circular in this regard.
It is believed that a circular will be issued by the Central Board of Direct Taxes to make necessary amendments to the rules and this will enable private sector employees to claim tax exemption on LTA. However, there will be some conditions and private sector employees will have to spend as per the guidelines for spending.