LTC Cash Voucher Scheme

On October 12, 2020, Union Finance Minister Nirmala Sitharaman announced LTC Cash Voucher Scheme for consumer spending. This scheme is mainly launched for boosting the consumption demand in the economy. This scheme is applicable for government as well as private employees. It aims at increasing the GDP (Gross Domestic Product) of the economy. Due to the pandemic situations, employees are not able to utilise the Leave Travel Concession (LTC) benefits, thus central government announced tax benefits for its employees. Under this scheme, the employees will have to spend 3 times of their LTC fare for purchasing items which have 12% or more GST. Thus, scheme aims to demand generation in the economy as well as GST collections will increase.

Scheme Overview:

List of scheme lunched by Central Government

Scheme Objectives and Benefits:

• The main objective of the scheme, to boost the consumption demand in the economy by enabling the employees to use LTC benefit
• Due to the pandemic situations, the employees are not bale to avail the benefit of their Leave Travel Concession/ Leave Travel Allowance, thus this scheme enables the employees to avail the benefit without actually travelling anywhere
• Under this scheme, employees can buy goods with their LTC tax free benefit
• This will boost the demand and consumption in the economy thereby increasing the GST collections
• This scheme is available for both government as well as private sector employees
• It will enable the employees to use the equivalent amount of LTC for purchasing the goods with 12% or more GST

Scheme Details:  

• LTC Cash Voucher Scheme is launched by Union Finance Minister, Nirmala Sitharaman
• Under the scheme, employees will be able to use the LTC benefit without actually travelling anywhere
• Employees will get the LTC tax benefit in cash for purchasing the goods with 12% or more GST
• Due to the pandemic situations all over, the economy has been hit really hard especially in the first half
• This scheme aims at boosting the overall consumption demand in the economy
• It will also increase the GST collections
• Demand from the central government employees is expected to be around Rs. 19,000 crores and from the state employees it is expected to be around Rs. 9,000 crores
• This scheme is implemented by the government for its central government employees
• Private sector employees can also offer the scheme to their employees, however this decision of implementation is completely at the discretion of the private sector
• If the private sector decides to implement the scheme, it will give an additional noticeable boost to the demand and GST collections thereby
• Demand generation of Rs. 28,000 crores are expected through this scheme