Many employees get Leave Travel Concession (LTC) facility from their company. It is a part of their salary benefit. According to the current LTC scheme, the employee can travel with his family twice in 4 calendar years to save tax on the amount spent as air, rail or bus fare anywhere in India. This tax exemption
Income is found under section 10 (5) of the Tax Act.
However, due to the coronavirus pandemic, many employees could not take advantage of LTC. In such a situation, to benefit the employees, the government has announced a scheme in which the employees receiving LTC allowance can claim benefits at the fixed cost for the four-year block year 2018-21. It has been implemented from Finance Bill 2021.
Accordingly, if the following conditions are fulfilled then you can claim benefit
1. This exemption is only for employees whose share of salary is of LTC.
2. This exemption will be available for Block Year 2018-21 and will not be applicable to those who have used LTC Benefit for two trips during Block Year 2018-21.
3. The employee can buy any goods or services for himself or his family with the amount of LTC. On this, he will get the benefit of tax exemption.
4. There will be a tax rebate on spending of LTC on goods or services with a GST of 12 per cent or more. That is, these goods or services should be purchased from the vendors registered in the GST.
5. Also, it is necessary to have a GST invoice. This means that the tax invoice should clearly record the GST.
6. It is also necessary that the account payee check or account payee to be withdrawn from the bank should be from bank draft or electronic clearing system like NEFT, RTGS, UPI, Credit or Debit Card. These are mentioned in Rule 6ABBA of Income Tax. It is important to note that this exemption will not be available on expenses in which cash is given or made through a check or bank draft which is not an account payee check or draft. In this case, it is necessary to keep proof of payment in this case.
7. Benefit will be available only till 31 March 2021 at a cost incurred. It will not be applicable on subsequent expenses.
8. Discount amount
This discount will be available on the lowest of these
One-third of the fixed expenditure
Or Rs 36,000 per person
There are many such goods or services which are subject to 12% or more GST tax. Benefit can be taken on these. Many of these items come daily and electronic, besides services like insurance are also included in this. However, in order to claim exemption, the above conditions will have to be met by the employee.