Govt LTC scheme: Employees may have to spend Rs 1 L for reimbursement

The governments measures to boost consumption demand by providing more money into the hands of individuals would require a central government employee to spend in excess of Rs 1 lakh to claim leave travel concession reimbursement of just over Rs 30000As per the LTC fare schedule provided by the finance ministry the deemed airfare round trip for a person entitled to travel business class is Rs 36000 while those entitled for economy class air travel and rail travel any class is Rs 20000 and Rs 6000 respectivelyWhat this means is that under the special cash package involving LTC an individual will have to spend in excess of Rs 108000 Rs 60000 and Rs 18000 respectively between now and March 31 to get fare reimbursement as per entitlement for unused portion of LTCSimilarly for getting 10 days reimbursement of leave travel encashment available under LTC package to government employees an individual will have to spend value equivalent to the encashment to get the refundsThe LTC money of government employees to buy consumer goods would dry up those funds for the travel sector Additionally it would also send a vote of noconfidence to the tourism travel and hospitality industry which was looking to get back on its feet after Unlock Since this LTC is a 4year block scheme it will also cut away funds for future travel demand source for the next year when the LTC block ends in 2021 Federation of Associations in Indian Tourism amp Hospitality FAITH said reacting to the governments announcements on MondayCentral government employees get LTC in a block of 4 years one to anywhere in India amp one hometown or two for hometown The entitlement for air or rail fare as per pay scale is reimbursed and in addition leave encashment of 10 days pay DA is paidThe government has allowed reimbursement scheme for LTC as due to Covid19 employees are not in a position to avail full quota of LTC in the current block of 201821 But this additional spending without actual travel involved under the new scheme would give a boost to demand ahead of festival seasonUnder the new scheme LTC reimbursement will only be considered if spending is done on items or services accounting for 12 per cent GST rate or more So this will rule out spending on food articles to claim LTC reimbursement Also reimbursement will only be made after GST vouchers are provided by an employeeTo be eligible under the scheme an employee will have to opt for both leave encashment and LTC Reimbursement under the scheme will also depend on the spending done by an individual So if full quota of spending is not done the payment will be calculated based on actual level of spending But in any case the actual level of spending should be more than LTC and encashment entitlementFull tax benefit will be given on full quota of entitlement of fare under LTC while leave encashment would be taxable The government will amend income tax rules to permit tax exemption on deemed travel expenses of employeesTo allow individuals to get advance payment of LTC claims it has been decided that an amount equivalent to 100 per cent of leave encashment and 50 per cent of the value of deemed fare will be paid as advance into the bank accounts of employees The entire spending and claims has to be made by March 31 2021Keep scrolling to read more newsCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updates MidDay is now on Telegram Click here to join our channel middayinfomedialtd and stay updated with the latest newsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever