Finance Minister Nirmala Sitharaman, on October 12, announced a Leave Travel Concession (LTC) cash voucher scheme to increase consumer spending.
Under this LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment, plus three times ticket fare, to buy items which attract a GST of 12 percent or more. Only digital transactions allowed, GST invoice to be produced, FM Nirmala Sitharaman said.
"Every four years, central government employees get LTC to any destination to their choice plus one to their hometown. Since travel is difficult to undertake during the pandemic, the government will pay the entitled fare as cash vouchers which have to be spent by March 31, 2021," she said.
Central government payout on cash-in-lieu-for-LTC will be Rs 5,675 crore, and another Rs 1,900 crore will be payout by central PSUs and public sector banks, Sitharaman said.
The tax concession will be allowed for the State Government/Private sector too, for employees who are currently entitled to LTC, subject to following the guidelines of the Central Government scheme.
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Demand infusion in the economy by Central Government and Central PSE/PSB employees is estimated to be Rs. 19,000 crore approx.
The FM said that the demand infusion by State Government employees will be Rs. 9,000 crore. Additional consumer demand generated will be Rs. 28,000 crore.
Indications are that savings of govt. and organized sector employees have increased, we want to incentivize such people to boost demand for the benefit of the less fortunate
Estimated cost of LTC Cash Voucher Scheme
For Central govt. : ₹ 5,675 crore
For PSBs & PSUs: ₹ 1,900 croreOctober 12, 2020