As per the existing provisions of the Income Tax Act, 1961(‘the Act’), tax law an employee can claim tax exemption of LTA/LTC (if provided by employer) subject to the conditions as specified under the Act. To claim the said tax exemption under section 10(5) of the Act, an employee is required to provide proof of his travel and related documentation to substantiate the LTA claim. Owing to restricted travel on account of Covid pandemic and with a view to boost consumption, the Government has introduced LTC/LTA cash voucher scheme to allow employees eligible for LTC/LTA to claim tax exemption of similar amounts subject to certain conditions.
SCOPE
This policy is applicable to eligible Full Time Employees of the company.
Private ,
Public ,
PSU ,
Gov ,
Non- Gov
DATE OF COMMENCEMENT
This policy comes into play effect from 12 October 2020 and is valid till 31 March 2021.
ELIGIBILITY:
The employee will be eligible to claim exemption under LTA/LTC cash voucher scheme if the following conditions are met:
There remains unutilized LTC Under the Block of 2018-2021.
The Goods and / or Services on which GST is leviable at 12% or more are eligible for the exemption if purchased.
The payments has to be done via electronic mode..
The purchase should be made between 12 October 2020 to 31 March 2021.
MAXIMUM LIMIT:
An employee can claim a maximum allowable limit of Rs. 36,000 per person for the eligible family members by spending three times on goods and services on which GST is leviable @12% or more is levied.
An employee who spends less than three times of the deemed LTC fare shall be eligible for a
reduced deemed LTC in proportion to the actual spend made by the employee
Example: For example: If an employee spends INR 95,000 instead of INR 108,000 (3 times the
exemption amount) then his exemption will be prorated as follows:
(36,000/108,000)*95,000 i.e. INR 31666.67
Therefore applicable Tax rate will be savings for the Tax Payer that is 20% or 30% As the case maybe on 31666.67 .
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