Festive Stimulus: Know How LTC Voucher Scheme Will Benefit Government Employees

The government has mooted the LTC voucher scheme with a view to spur demand worth ₹28,000 crore

New Delhi: Union Finance Minister Nirmala Sitharaman during a press conference, in New Delhi, Monday, Oct. 12, 2020. (PTI Photo)

New Delhi: In order to spur demand in the economy, Finance Minister Nirmala Sitharaman on Monday made a significant announcement for government employees in form of Leave Travel Concession voucher scheme to encourage spending. The government has mooted the LTC voucher scheme with a view to spur demand worth ₹28,000 crore. The scheme is aimed to incentivise the govt sector employees' contribution for the revival of demand in the country.

Here’s a look at the scheme and how it will benefit you. Under the LTC voucher scheme the beneficiaries will be required to buy goods and services worth three times the fare encashment and equivalent to the leave encashment.

The LTC Cash Voucher Scheme has the potential to generate demand worth about Rs 28,000 crore. (2/2) pic.twitter.com/I7142bzjig

— NSitharamanOffice (@nsitharamanoffc) October 12, 2020

Basically, instead of LTC fare for air ticket you will get a cash voucher and can spend it on any purchase. Central government employees can avail LTC in a block of four years (one to anywhere in India & one hometown or two for home town) Air or rail fare. This is calculated as per pay scale/entitlement and in addition, Leave encashment of 10 days (pay + DA) is paid. In case you want to claim one LTC during 2018-21, cash payment will be made on full payment on leave encashment and payment of fare in three flat-rate slabs depending on class of entitlement. Also, note that the fare payment will be tax free. Most importantly, only digital transactions will be allowed. "If Central Government employees opt for it, cost will be around Rs. 5,675 crore. Employees of PSBs and PSUs will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore," FM said. How can you avail? To avail this scheme you have to make the purchase before 31" March 2021. The money has to be spent on goods attracting GST of 12 per cent or more from a GST registered vendor through digital mode. GST invoice will be required to be produced. Typically you will get the LTC amount which you can spend on items three times costlier than the amount received through digital payment. It means you get one third amount from the government the two third that you spent from your pocket will help in demand generation. It will also fetch 12 percent GST for govt.  As of now, it looks like a festival bonus, but with additional conditions. However, it is still not clear how much amount an employee can avail. Since an employee can claim the LTC for wife and kid, so will the employee get a voucher for all three family members, and how the rates have been fixed will be something that is still not clear. The government has also announced a one-time restoration of the festival advance for central government employees through the Special Festival Advance Scheme. This is expected to generate demand of at least about ₹ 8,000 crore.