What exemption on LTC money voucher scheme means for you
New Delhi: Finance Minister Nirmala Sitharaman in Price range 2021 proposed to supply tax exemption to the money allowance given to an worker in lieu of Go away Journey Concession (LTC) topic to incurring the desired expenditure. Be aware that the LTC money voucher scheme was introduced by the federal government final yr for people who had been unable to say their LTC tax profit as a result of COVID-related restrictions on touring.
LTC money voucher scheme:
The federal government introduced an LTC money voucher scheme for its workers. By choosing this scheme, authorities workers should buy items and companies in lieu of the tax-exempt portion of the Go away Journey Concession/Go away Journey Allowance (LTA/LTC). He/she will declare tax-exemption on the journey fare encashed if the quantity is spent by satisfying specified circumstances. Later, the Central authorities prolonged the Revenue Tax profit on the LTC Money Voucher scheme to the non-Central Authorities Staff, which incorporates private-sector staff as effectively.
Below this scheme, authorities workers can choose to obtain money amounting to go away encashment plus 3 instances the ticket fare (i.e. Rs 36,000 per particular person), to purchase objects that appeal to Items and Providers Tax (GST) of 12 per cent or extra. The staff should train an choice for the deemed LTC fare in lieu of the relevant LTC within the Block yr 2018-21.
LTC money voucher scheme tax implications:
The scheme additionally supplies that in case the worker spends a decrease quantity, the entire quantity payable could be proportionately decreased. Additional workers who’ve opted for the simplified tax regime (new tax regime) usually are not eligible to say tax reduction beneath this scheme. Nonetheless such workers could contemplate to re-opt for the present tax regime, if that is an choice offered by the employer, to avail of the profit beneath the scheme.
A taxpayer can avail of the LTC money voucher scheme by adhering to the next circumstances:
- The quantity must be incurred between the desired interval of 12 October 2020 to 31 March 2021
- The fee needs to be incurred vide digital mode viz. UPI, cheque, credit score or debit card, and so forth.
- The acquisition needs to be made out of a GST registered vendor and the bill needs to be obtained which could be furnished to the employer.
Here is what the tax exemption means for you:
Upon satisfying the above-mentioned circumstances, the deemed LTC fare reimbursable to the staff shall be exempt from tax. Nonetheless, in circumstances the place the quantity spent on specified buy is lower than thrice the deemed LTC fare, the quantity of exemption shall be proportionate. Price range 2021 has proposed legislative amendments in order to cowl the above issues referring to LTC throughout the provisions of the Act.
“With a view to present reduction to workers, it’s proposed to supply tax exemption to the quantity given to an worker in lieu of LTC topic to incurring of specified expenditure,” the Price range doc acknowledged.