DRAFT FOR THE NEW LTA CASH VOUCHER/ EXEMPTION SCHEME 2020 FOR THE BENEFIT OF EMPLOYEES:
In view of the COIVD-19 pandemic and resultant nationwide lockdown as well as disruption of transport and hospitality sector, as also the need for observing social distancing, a number of employees are not able to avail of Leave Travel concession (LTC) in the current block of 2018-21.
Therefore, for the benefit of the employees the Finance Ministry has launched a scheme of granting LTA Exemption to the Central Govt as well as Private sector employees. Under this scheme the employer can grant LTA exemption from Income tax to the employee if the employee spends a specified amount on the goods/ services having GST rate of 12% or more by March 31, 2021.
In line with the Press release of Ministry of Finance ———————— Co Ltd announces the following Scheme of exemption of LTA.
The eligibility and rules of the Scheme are as follows:
1. The scheme will be applicable to the Grade ———— associates
2. The employee who has availed two income tax exemptions in the Block of 2018-21 is not entitled to take exemption under this scheme.
3. A simple application conveying the desire of the employee for availing the benefit of the scheme is required.
4. The employee is not required to take leave to avail this LTC. This scheme is in lieu of LTC travel.
5. The employee spends a sum equal to three times of the value of the eligible LTA fare on purchase of goods/services which carry a GST rate of not less than 12% from GST registered vendors/service providers through digital mode during the period from the 12th of October, 2020 to 31ST of March, 2021 and obtains a voucher/ bill indicating the GST number and the amount of GST paid. If the employee spends a lesser amount than his eligible LTA amount, the exemption under the Income tax will be proportionately reduced.
6. Some of the items on which the employee can spend the LTC amount are: Refrigerator, washing machines, mobile phones, two wheelers/four wheelers (other than electric vehicles) sewing machine, jewellery box, washing machine, vacuum cleaner, television, water coolers, food grinder etc.
7. The employee can also spend money on services as well to avail the benefit of tax exempt LTA e.g. Interior design services where the GST rate is 12% or more than 12%.
8. The invoice which is being submitted for reimbursement under the scheme should be in the name of the employee who is availing the benefit under the scheme.
9. Multiple bills will be accepted. But as mentioned above the purchase should carry a GST of 12% and above and payment should have been made by digital mode
10. Procurement from E- Commerce Platform is also permissible provided the relevant invoice along with necessary details is submitted.
11. The employer shall allow income –tax exemption subject to fulfilment of the above conditions and after obtaining copies of invoices of the expenditure incurred during the period from October 12, 2020 to March 31, 2021. Further, as this exemption is in lieu of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime under section 115BAC of the Income-tax Act, 1961 shall not be entitled for this exemption.
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