LTC Cash Voucher Scheme – Minister of Finance important announcement for Consumer Spending
Measures to Stimulate Consumer Spending
Proposals to stimulate consumer spending has two components
- LTC Cash Voucher Scheme
- Special Festival Advance Scheme
LTC Cash Voucher Scheme
Indications are that savings of govt. and organized sector employees have increased, we want to incentivize such people to boost demand for the benefit of the less fortunate. On a conservative basis, we expect the LTC Cash Voucher Scheme to generate additional consumer demand in the range of ₹ 28,000 crore.
– Union Finance Minister Smt. Nirmala Sitharaman
Under LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment + 3 times ticket fare, to buy something of their choice. The items bought should be those attracting GST of 12% or more. Only digital transactions are allowed, GST Invoice to be produced.
The biggest incentive for employees to avail the LTC Cash Voucher Scheme is that in a four-year block ending in 2021, the LTC not availed will lapse, instead, this will encourage employees to avail of this facility to buy goods which can help their families.
Estimated cost of LTC Cash Voucher Scheme: For Central govt. : ₹ 5,675 crore; for PSBs & PSUs: ₹ 1,900 crore.
Tax concessions for LTC tickets available for state govt. & private sector too, if they choose to give such facility, these employees too can benefit.
LTC CASH VOUCHER SCHEME
- Due to COVID-19, employees are not in a position to avail of LTC in the current block of 2018-21.
- LTC Cash Voucher Scheme to provide cash payment to Central Govt. employees in lieu of LTC during 2018-21, along with leave encashment.
- Tax free payment of fare in three flat-rate slabs as per class of entitlement.
- Full payment for leave encashment of 10 days (pay+DA).
- Expected demand generation Rs. 28,000 crore.
Amount to be spent on
- Employees opting for this scheme will be required to buy goods/services worth three times the fare and one time leave encashment.
- Goods/services urchased should be attracting GST of 12% or more.
- Purchase should be made from a GST registered vendor through digital mode.
- Money should be spent before 31 March 2021.
- Potential private sector spending through LTC tax benefit likely to generate additional demand of Rs. 28,000 crore.