Leave Travel Allowance (LTA) is not a rule with leave encashment in the private sector. This is a gift to government employees as they cannot claim LTC without traveling.
LTC Cash Voucher Scheme Latest News: The government has announced the LTC Cash Voucher Scheme for the Central Government. The government’s idea behind this is to accelerate consumer demand to revive the economy plagued with corona. The government relies on private sector participation for the success of the scheme. However, like the previous schemes, this scheme was also designed with government employees in mind. The government hopes that private companies will follow suit. Leave Travel Allowance ( LTA) Is not a rule with leave encashment in the private sector. This is a gift to government employees as they cannot claim LTC without traveling. In contrast, in the private sector, you can claim LTA by paying tax. It is part of the CTC. Let’s try to understand this.
Your Leave Travel Allowance ( LTA) for this financial year) Suppose lakhs of rupees. To get a tax-free claim, you have to show travel tickets or pay Rs 30,000 tax on it. Now suppose the government is giving you the opportunity to save 30 thousand rupees without traveling to Goa or Kerala … but for this you have to buy 3 lakh rupees. With this, you have to buy goods beyond the GST rate of 12 per cent. These include cars, laptops, TV sets, fridges, smartphones, and more. You can also buy term insurance premiums and ULIPs, even if they have a GST rate of 18 per cent.
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Who will benefit
Rahul Garg, a senior tax partner at PWC India, said LTC to the private sector is usually equivalent to one month’s basic salary, on which a private sector employee would have to spend three times as much to save tax. This will benefit those who have extra money, or want to buy these items. But in these times of uncertainty like the corona, it can be difficult for others to do so.
This is what confusion is all about
Surya Bhatia, a financial adviser, says that if you are wondering if the scheme announced by the Center will benefit you in any way … you should not choose this option. Yes, if you have a shopping plan for the next 6 months, you can choose this to your advantage. Homi Mistry, a partner at Deloitte, said those who choose this option have to think and make a decision. Especially what happens to those who choose the new tax system this year. Under this, you can pay income tax at a lower rate, but for this you have to waive all kinds of deductions. It also includes discounts on LTA.
EY tax partner Shalini Jain said they would have to wait for the amendment in the tax rules. Only then will things become clear. Also, it remains to be seen whether those who have already claimed LTA will benefit from the scheme.
