Get All Access for $5/mo

Employee LTC Cash Voucher Scheme And How To Claim It As per this new scheme, you do not need to travel for claiming the tax exemption

By Sujit Bangar

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Unsplash

In the current financial year, COVID-19 has made all of us to stay at home and hence few people could go on vacation or travel unlike every year. Many employees have leave travel concession (LTC) included in their CTC package. This component is tax free to the extent of actual expenses on travel as per section 10(5) of the Income tax Act. However, this year because of travel restrictions, this tax exemption in respect of LTC Block of 2018–21 was potentially going waste. The central government announced a substitute for such travel requirement in the form of a LTC Cash Voucher Scheme. This scheme was extended to private sector in December, 2020. This scheme is now notified in Budget 2021.

As per this scheme, you do not need to travel for claiming the tax exemption. The employee must incur expenditure on goods and services which are liable to GST at 12 per cent or more. Such goods or services must be purchased from GST registered vendors or service providers. The employee is expected to purchase such goods and services in the period from 12/10/2020 to 31/03/2021.

The maximum limit for tax exemption is INR 36, 000 per person in employee's family or one-third of the amount spent on such GST liable goods and services, whichever is lesser.

The payment for such goods and services should be made only through banking channels such as cheque/DD/credit or debit cards or digital modes such as UPI. Cash payments are not allowed. The employee shall submit invoices to employer, mentioning vendor, GST number and GST paid.

The benefits of LTC Cash Voucher scheme are available in Old Tax Regime. If you are planning to avail new tax regime, this scheme won't be applicable from tax exemption point of view.

Founder of TaxBuddy.com, Sujit Bangar has revolutionized the tax filing landscape in India by empowering entrepreneurs, and start-up owners with comprehensive tax advisory and financial management services.
News and Trends

"45% of All Ongoing Hydropower Projects in India are Ours": Patel Engineering

Patel Engineering reported a turnover of INR 4,400 crore in the last fiscal year, with a projected 10 per cent growth for the current year.

Leadership

Visionaries or Vague Promises? Why Companies Fail Without Leaders Who See Beyond the Bottom Line

Visionary leaders turn bold ideas into lasting impact by building resilience, clarity and future-ready teams.

Business News

Former Steve Jobs Intern Says This Is How He Would Have Approached AI

The former intern is now the CEO of AI and data company DataStax.

Science & Technology

Why Businesses Are Relying on Automation to Survive the Labor Crisis

Robots are revolutionizing industries by addressing labor shortages and enhancing efficiency, while businesses navigate challenges like workforce adaptation and high implementation costs.

Marketing

5 Critical Mistakes to Avoid When Giving a Presentation

Are you tired of enduring dull presentations? Over the years, I have compiled a list of common presentation mistakes and how to avoid them. Here are my top five tips.