(1) Exemption for Cash allowance receive in lieu of Leave Travel Concession (LTC): Provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC. However the exemption shall be allowed subject to certain condition.
(a) The employee exercises an option for the deemed LTC fare in lieu of the applicable LTC in the Block year 2018-21.
(b) Specified expenditure means expenditure incurred by an individual or a member of his family during the specified period on goods or services which are liable to tax at an aggregate rate of 12% or above under various GST laws and goods are purchased or services procured from GST registered vendors/service providers.
(c) Family means (Self, Spouse, children, Parents (excluding in –laws) and dependent brother and Sister of the employee).
(d) Specified period means the period commencing from 12th day of October, 2020 and ending on 31st day of March, 2021.
(e) The amount of exemption shall not exceed 36,000/- per person or 1/3 of specified expenditure, (Purchase) whichever is less.
(e) The payment to GST registered vendor/service provider is made by an account payee cheque drawn on a bank or account payee bank draft, or use of electronic clearing system through a bank account or through such other electronic.
Note: Do keep in mind that the benefit of the LTC Cash Voucher scheme is available in the old tax regime.
This amendment will take effect from 1st April, 2021 and will, apply in relation to the assessment year 2021-2022 only.