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10 things to know about the LTC voucher program: benefits, expenses, conditions and more

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The employees will receive the full payment of the vacation collection and the tax-free payment of the SLD rate in 3 flat-rate installments according to the class of entitlement.

As part of the LTC Cash Voucher program, the government decided to provide a cash payment to employees instead of a single LTC in 2018-2021. The employees will receive the full payment of the vacation collection and the tax-free payment of the LTC tariff in 3 flat-rate installments according to the class of entitlement. The circular for the LTC Voucher Program for Central Government Employees has been issued and private sector employers can now design their own structure based on the guidelines provided.

Given the Covid-19 pandemic and the resulting lockdown across the country, as well as the disruption to the transportation and hospitality sector, as well as the need to observe social distancing, a number of employees are unable to avail long term care to move to any location in India or their home cities in the current block of 2018-21.

In order to compensate and encourage the consumption of employees and thus stimulate consumption expenditure, it was decided that the cash equivalent of LTC, including the receipt of leave and the LTC rate of the LTC beneficiary , could be paid as a refund.

1. What is it

The biggest incentive for central government employees to take advantage of the LTC cash voucher program is that in a four-year block ending in 2021, unused LTC will lapse, instead, it will encourage employees to take advantage of this facility. An employee, opting for this plan, will have to buy goods or services worth 3 times the tariff and 1 time the receipt of the leave before March 31, 2021. The items purchased must be those benefiting from the GST of 12% or more. Only digital transactions are authorized, the GST invoice to be produced.

2. What do employees receive

Central government employees get long-term care in a block of 4 years during which the air or rail fare, depending on the pay scale / entitlement that is reimbursed, and in addition, a 10-day holiday allowance ( salary + DA) is paid. But due to COVID-19, employees are unable to access long-term care in the current block of 2018-21.

Therefore, the government decided to pay a cash payment instead of an LTC in 2018-2021, in which:

  • Full payment on receipt of leave and
  • Payment of the tariff in 3 flat-rate installments depending on the class of rights
  • The payment of the tariff will be tax free

3. Who can benefit everyone?

Employees of public sector banks (PSB) and public sector enterprises (PSUs) will also benefit from this facility. Tax benefits for LTC tickets available to the state government. and the private sector too, if it chooses to provide such a facility, will be available to employees, subject to the directives of the central government scheme.

4. Conditions to be fulfilled

If an employee opts for this instead of a LTC in the 2018-2021 block, they will be subject to the following conditions:

a) The employee spends more money than the entitlement for long-term care in actual expenditure.

(b) The cash equivalent of the full receipt of leave will be allowed, provided the employee spends an equal amount. This amount will count towards the number of LTC leave collections available to an employee.

5. How much cash equivalent qualifying

The amount for both leave and tariff is eligible if the employee is spending

(i) an amount equal to the value of the paid leave and;

(ii) an amount 3 times the cash equivalent of the deemed tariff,

The eligible payment will be limited to the total value of the package (receipt of leave as eligible for LTC and deemed rate) or according to expenses.

6. Where to spend

The expenses must be spent on the purchase of those items / use of those services which carry a GST rate of at least 12% from GST registered vendors / service providers via the digital mode and obtain a voucher showing GST number and GST amount. paid.

7. Will there be TDS

Although the TDS is applicable in the case of the collection of leave, since the cash reimbursement of the LTC fare replaces the deemed real trip, the same will apply for the exemption on the lines of the tax exemption on the income available for the LTC tariff. Legislative amendment to the provisions of the Income Tax Act 1961 for this purpose will be proposed in due course. Therefore, TDS will not be required to be deducted from the reimbursement of the deemed LTC tariff.

8. Will employees receive an advance

An amount of up to 100% of the receipt of leave and 50% of the value of the deemed tariff may be paid as an advance to the employee’s bank account, which will be settled on the basis of the production of receipts for the purchase and use of goods and services. Claims under this package (with or without advance) must be made and settled during the current fiscal year.

9. Non-use / under-use of advances

Non-use / under-use of the advance must be accounted for by the employer in accordance with the existing provisions relating to the advance for long-term care, i.e. immediate recovery of the full advance in non-use and recovery of the unused portion of the advance with interest penalty.

10. When will the refund take place

Department managers / DDOs can make a refund under this package upon receipt of invoices for purchases made / services served during the period after the issuance of this order by employees wishing to benefit from this package. It should be noted that to benefit from this package, an employee must opt ​​for the cashing of leave and the SLD rate.

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