People opting for lower tax regime not eligible for LTC stimulus: Govt

The clarifications said non-central government employees will get tax exemption on cash allowance subject to a maximum of Rs 36,000 per person as deemed LTC fare.
People who opted for the lower tax regime provided in the Budget for 2020-21 are not eligible for the new incentive package through leave travel concession (LTC), said the finance ministry clarified on Thursday.

"...as this exemption is in lieu of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime... shall not be entitled for this exemption," said the revenue department, which come under the ministry.

The department clarified this point while expanding the scheme to employees of the private sector, the public sector units and state governments.

The clarifications said non-central government employees will get tax exemption on cash allowance subject to a maximum of Rs 36,000 per person as deemed LTC fare.
Other rules like spending three times the deemed LTC fare on those goods which attract goods and services tax (GST) remain the same as were there for central government employees.

However, those private sector employees who spend less than three times of the deemed LTC fare on specified expenditure will get proportionately reduced cash and income tax benefit, the clarifications said.

Also, employees will have to return the proportionate unspent amount to the employer. For instance, if an employee spends just 75 per cent of the three times of deemed LTC fare, he would have to return 25 per cent of that fare to the employee. 



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