NEW DElHI: Finance Minister Nirmala Sitaraman on Monday announced leave travel concession (LTC) cash voucher scheme to stimulate consumer spending.
“Indications are that savings of government and organized sector employees have increased. So, we want to incentivize such people to boost demand for the benefit of the less fortunate,” FM said.
Under LTC cash voucher scheme, government employees can opt to receive cash amounting to leave encashment plus 3 times the ticket fare, to buy items that attract GST of 12 percent or more.
Only digital transactions will be allowed in this and GST invoice will be produced, Sitharaman said.
“LTC cash can be used to buy goods, services worth 3 times fare, 1 time leave encashment before March 31, 2021. Fare payment will be tax-free and leave encashment will be taxed at the usual rate,” she added.
Responding to a question posed by CNBC-TV18, Sitharaman clarified that there was no additional spend under the LTC and festival measures announced by the government.
Meanwhile, experts hailed FM’s move.
“With the festival advance and the LTC cash voucher scheme, a corresponding boost in GST collections can be expected,” said Archit Gupta, Founder and CEO, ClearTax.
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 demand infusion because of this would be Rs 19,000 crore, and another Rs 9,000 crore if half of the states follow this guideline, she added.