128 week ago — 4 min read
Due to Covid-19 pandemic and restriction on travel, most of employees are not able to claim the benefits of the Leave Travel Allowance (LTA) scheme. But in the Union Budget 2021-22, Union Minister for Finance, Nirmala Sitaraman, proposed a new scheme called Leave Travel Allowance Cash Voucher Scheme.
This scheme was announced in October 2020 for the State government employees but in this current union budget (2021-22) the government has announced this for all the individuals who are unable to travel due to the pandemic and unable to claim the benefits of LTA tax benefits.
Currently as per section 10(5) of the Income-tax Act, 1961 Leave Travel Allowance scheme provides for an exemption for the value of travel concession or assistance by an employer to its employee and their family subject to employee proceeding on leave for vacation in India.
However, considering the situation of Covid-19 pandemic, the government has notified Cash Voucher Scheme in October 2020 in lieu of LTC, subject to conditions.
An individual employee is required to fulfil certain conditions to avail the benefits of Cash Voucher scheme.
Under the new scheme LTC options will be exercised for the block of 2018-21.
However, these above points specified in the memorandum, it can be effective once the relevant Income-tax rules are notified.
This way new LTC voucher scheme gives option to the individuals to spend on eligible goods and services and claim the tax exemptions.
The Department of Expenditure under the finance ministry also clarified that purchase of goods like bikes, cars, etc. employee can submit a self-attested photocopy of bills as a proof for availing the benefits of the scheme.
Payments for premiums for existing Insurance policies and would not be covered under the LTC cash voucher scheme. However, payments for premiums for insurance policies purchased during the period between 12 October 2020 to 31 March 2021 is eligible for reimbursement under the scheme.
However, bills need to be submitted on or before 31 March 2021 to avail the benefits of cash voucher scheme said the Expenditure Department
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Posted byParth Mishra
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