In good news for lakhs of central government employees, the Centre has said that they need not pay income tax on the amount received against LTC.
7th Pay Commission: During the coronavirus period, the responsibility on government employees had increased considerably. The Modi government also understands this properly. Realizing his good work, the Modi government has also given a gift. In the budget, Finance Minister Nirmala Sitharaman had announced that LTC Cash Voucher Scheme has been excluded from the income tax category.
1. Finance Minister Nirmala Sitharaman announced in Budget 2021
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In the budget speech, Finance Minister Nirmala Sitharaman said that LTC has been kept in tax exemption due to COVID-19 pandemic. The government hopes that this scheme will also bring more money in the pockets of government employees, leading to increased spending. The economy will benefit from this entire system.
2. What is cash voucher scheme
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The scheme was announced on October 12 last year. Earlier, this scheme was only for central employees but later private and other state employees were also included in this scheme. Employees who could not take advantage of LTC due to coronavirus will be given the benefit of cash voucher scheme in the Travel Allowance Leave Scheme.
3. What is LTC?
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Union employees get Leave Travel Concession (LTC) in 4 years. In this allowance, the employee can travel anywhere in the country. During this time, the employee gets a chance to go home to his hometown twice. In this travel allowance, the employee gets the cost of air travel and rail travel along with a 10-day PL (Privilege leave).
4. Guidelines for cash voucher scheme
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Cash payment will be given to employees in lieu of LTC and travel fare will be paid according to the grade of the employee. Payment of fare will be completely tax free. Employees will have to spend money on an item which attracts 12% or more GST. GST receipt has to be given while claiming travel allowance or leave allowance.
5. Central govt employees' salary will increase
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During the COVID-19 criris, the Modi government had suspended the hike in the DA of the employees, but now this is going to be lifted soon. After the release of the AICPI (All India Consumer Price Index), it is almost certain that the estimated 4 percent DA will be increased. Also, the old DA will be given as an arrear in salary. Overall, soon the government employees are going to get more money.
6. IT relief is extended
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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.
