The announcement about LTC tax was by made by Union Finance Minister Nirmala Sitharaman in Union Budget 2021.
In a good news news for lakhs of central government employees, the Centre has said that they need not pay income tax on the amount received against LTC (Leave Travel Concession). The announcement in this regard by made by Union Finance Minister Nirmala Sitharaman in Union Budget 2021.
1. When was exemption given by Centre?
)
It may be recalled that this income tax exemption was given by Centre to the central government employees on 12th October 2020 (FY 2020-21) due to COVID-19 pandemic.
2. Why the IT relief is extended?
)
Since COVID-19 is still around, Prime Minister Narendra Modi-led government at the Centre has extended this income tax relief for all salaried taxpayers for the four year cycle of 2018-21.
3. What did Sitharaman say in her speech?
)
Announcing the relief for all salaried taxpayers Nirmala Sitharman said in her budget speech, "In order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC subject to incurring specified expenditure."
4. Benefit for central government employees
)
The major incentive for central government employees to avail the LTC Cash Voucher Scheme is that in a four-year block, which is set to end on 2021, the LTC not availed by central government employees will lapse, but this will encourage employees to make use of this scheme. The employee which will opt for this scheme will be required to buy goods or services worth 3 times the fare and 1 time the leave encashment before 31st March 2021. The items bought should be those attracting GST of 12 per cent or more.
5. Conditions to avail this benefit
)
1] The employee spends the money of a larger sum than the entitlement on account of LTC on actual expenditure.
2] Cash equivalent of full leave encashment will be allowed, provided the employee spends an equal sum. This will be counted towards the number of leave encashment on LTC available to an employee.
6. Hike in DA
)
Union Labour Office has declared the AICPI (All India Consumer Price Index) data which hints that Prime Minister Narendra Modi-led government at the Centre would announce at least 4 per cent hike in the DA.
7. What does the Centre's announcement on DA mean?
)
The announcement by the Centre means that 4 per cent DA hike for July to December 2020 and the expected 4 per cent DA hike uunder 7th pay commission for January to June 2020 will not be added in the monthly salary of the employees. But once the Centre announces DA hike and adds it to the central government employees' salary, there will be a huge jump in their income.
