LTC Cash Voucher Scheme: Benefits, Calculation, Application Process

LTC Cash Voucher Scheme 2023: Finance Minister Nirmala Sitharaman announced the cash-in-lieu of LTC which is the Leave Travel Concession. If you are engrossed in this subject and desire to apprehend added knowledge regarding the LTC cash voucher scheme then must examine the entire article. Here we have comprised all the informative topics by which candidates can easily understand the functioning and other aspects of LTC.

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LTC Cash Voucher Scheme 2023

According to the prerequisites of income tax, LTC profit is needed by employees in a slab of four years this duration is called a block.

Not only government sector employees, but also private & public sector can avail the advantages of LTC. And this is very great news for those employees who are working for a private organization. Deloitte partner Aarti Raote stated “India’s Finance Minister during her presentation explained the benefits of LTC that would be elongated to workers of government as well as private sector too. Nevertheless, after the release of the official circular, it is found that the notice only belonged to govt employees. And for this, an explanation was required.” For this, authorities have also released a notification in which they have mentioned complete info about LTC for the non-central worker too.

Only the fare part will be free of tax and the holiday will be subjected to encashment tax. You have to go for both leave encashment and LTC fare to be eligible for this tax relief package. The memorandum of the Ministry office of Finance states that encashment of up to 100% of leave & 50% of deemed rent can be given into the bank account of the employee and subsequently fixed after the statement will be equipped.

Motives for Introducing LTC Scheme

According to the concerned officials, it is stated that the scheme has introduced by the Finance Minister of India. Earlier government workers used the amount of money provided by govt. on their leaves, now which were left due to the coronavirus. Now, as constraints on travelling are deteriorating day by day, officials will be giving cash vouchers to all workers whether they are central govt employees or non-central as their travel expenses. With the help of this, employees can now visit anywhere.

Description of Deemed LTC Fare

As per the scheme called LTC cash-in-lieu, such employees can obtain their consent encashment (worth DA & basic 10 days) and receive reimbursement for travel expenses they are eligible for according to their category. Check out the table given below for detailed information regarding LTC fare.

Abstract of LTC Cash Voucher Scheme

Aspects of Leave Travel Concession Cash Voucher Scheme

1. All those employees who want to avail LTC Cash Voucher Scheme must spend an amount on those things which have 12% GST or more
2. If workers have spent money on food, then they will not be eligible to take advantage of this scheme.
3. Candidate must have a Bill or Invoice of GST of the purchased item in which the amount of item GST is mentioned.
4. With the help of this scheme demand for consumers in the market will definitely improve.
5. It is necessary that the candidate who wants to claim an LTC voucher must have paid the number of purchased things via digital mode only.
6. This scheme will help to build and grow the country’s economic flow.
7. It will also raise the GST number.
8. Workers have to spend 3 times the expense of travel if they desire to avail the benefit of this scheme.
9. Employees belonging to non-central or private/public can also take the advantage of LTC voucher scheme.
10. By introducing the LTC cash voucher plan, govt wants to produce an added demand of 1 lakh crore rupees in the economy.

Eligibility Standard for Availing LTC Scheme

All those applicants who are willing to avail the benefits of this scheme have to satisfy the eligibility criteria defined by higher authorities. In this segment, we have discussed the standard that all needy aspirants must fulfil.

1. Applicants must be Central Government or Non-Central Govt employees.
2. Only the citizen of India can exercise the benefits of this scheme.
3. All those applicants who are state government employees are also eligible for this scheme

Terms for Leave Travel Concession Cash Voucher Scheme

Employees working under central or non-central government will be compensated an amount which is equal to leave encashment and LTC fare by following these terms.

1. Amount spent by workers must be equal to the leave encashment part and three times of LTC deemed fare for acquiring anything or services.
2. The items purchased by an employee must have at least a 12% of GST rate.
3. Employees must remember one thing, items must be bought online/in a digital mode online from GST registered service providers or merchants.
4. For claiming LTC vouchers, workers must have a bill/ voucher, which includes the GST number of merchants and the GST price paid by employees.

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How Amount of LTC will be Calculated?

All those employees who are willing to know how LTC cash will be calculated then must read this essential section of this article. As per HostBooks Limited, the calculation of cash benefit will be done by implementing the steps given below. 

• Step 1st- Available Encashment Leave is 10 (Maxi.)
• Step 2nd- Leave Encashment Maximum Quantity is Pay Quantity * 10/30
• Step 3rd- Fare Value Maximum Amount is equal to Deemed fare as provided earlier * Number of those family members who are eligible.
• Step 4th- Total Maximum Quantity is Amount of Step 1st + Amount of Step 2nd.
• Step 5th- Full cash amount to be spent for profit = Step 1st Result + (Step 2nd result *3)
• Step 6th- Leave Encashment Total Percentage Share is equal to Step 2nd Amount * (100/ Step 5th Amount)
• Step 7th- Total Fare Percentage Share is Result of Step 3rd* (100/ Result of 5h Step)

Important Note:

1. In case the applicant (employee) consumes the amount of pay which is equal to the Step 5th amount, then the cash allotted to him/her will be equal to the amount of Step 4th.

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2. But, if candidate consumes an amount which is less than the value of Step 5th then, the amount which may be given to him/ her is as follows-

• Leave Encashment is equal to the Exact value spent * percentage displayed after calculating Step 6th. 
• Amount of Fare is Exact Value Consumes * percentage coming as a result after calculating Step 7th. 

Explanation with the Help of an Example

In this part of the article, we have given a complete explanation by solving an example of the steps mentioned above. 

Expected Salary of Worker: 1,25,500 per month
Expected Total Number of Member Employee Family: 4
Economy Class Air Travel (20,000) is Eligibility Fare
Calculation of LTC cash benefit is solved below.

1. Maxi. Encashment Leave is (1,25,500 * 10) / 30 which is Rupees 41,833
2. Maxi. Fare Amount (According to the eligibility standard of air travel fare of the economic class discussed) = 20,000 multiplied by 4 i.e Rupees 80,000
3. Total Amount of Full Cash Perquisite = 1,21833
4. As per the notice of the Finance Ministry, cash amount to be spent for profit = 41,833 Rupees + 240000 (INR 80,000*3) = 2,81,833 Rupees

Note: If a worker spent an amount which is fewer than 2,81,833 Rupees then cash benefit may hall be allowed given as specified below.

Let the amount spent by an employee is Rupees 2,00,000, then

•  Percent Share of Total Amount of Leave Encashment = 41,833 / 2,81,833 * 100 which is 14.84%
• Percent Share of Total Value Fare i= 80,000 / 2,81,833 * 100 which is 28.38%

The percentage which comes out as a result of applying it to the original spent amount is as follows.

1.  Employee may be allowed leave encashment of 14.84% on account that is 2,00,000 * 14.84% = Rupees 29,680
2. Employee may be allowed leave encashment of 28.38% on account that is 2,00,000 * 28.38% = 56,760 Rupees

Finally, Total Payable Value shall be Rupees 29,680 + Rupees 56,760 = 86,440 INR

Benefits of LTC Cash Voucher Scheme

1. The very first advantage of this scheme is that central and non-central employees will get the opportunity to avail of this plan and which provides several facilities for them.
2. The economic flow of our country will be on track again.
3. All workers who skipped their leaves due to the lockdown will get it in the form of LTC vouchers.
4. Through these vouchers, employees can travel, and buy things except food items but only those things which have more than 12% of GST.

Procedure to Apply for LTC Voucher Plan

There is no such particular procedure declared by higher authorities to apply for the LTC scheme. Central or non-central employees, who want to avail the plan are required to submit the application form and present a bill of the purchased item. Aspirants, please remember one thing, those goods and services which you have bought must indicate 12% GST or more.

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