Government, on Monday, announced two sets of measures to get consumption demand and boost capital spending within the economy. One is LTC cash voucher and festival advance schemes.
LTC cash voucher scheme – it’s to permit the govt and personal sector employees to use their LTC tax free benefit for various sorts of purchases subject to certain conditions. Basically, it’s converting tax exempt travel expenditure into tax exempt consumer expenditure.
What is LTC?
Leave Travel Concession (LTA) are such tax exemption allowances which the govt. employee can claim of he/she undertakes to travel with their families within India. Central govt employees get LTC during a block of 4 years (one to anywhere in India and one hometown or two for hometown).
Conditions to avail of this scheme –
Conditions that has got to be satisfied by an employee to avail the tax-exempt encashment of travel fare amount are as follows:
• Buy goods and services worth 3 times the tax-exempt amount paid before 31.3.2021.
• Spend the cash on buying items attracting GST of 12% or more from GST registered vendor and buy must be in digital mode
• GST invoice will need to be produced.
• Scheme hospitable private sector wherever the employers currently offer LTC. Scheme also hospitable PSUs, PSBs and government employees.
• Payment of LTC fare in 3 flat-rate slabs counting on class of entitlement of state employees.
It is expected to make a requirement generation of ₹ 28,000 crore within the economy which is ₹19,000 crore from Central govt and ₹9,000 crore from the State govt. Same benefits is additionally available to non-public sector employees if the employer’s plan to offer the scheme and therefore the employees comply with avail it.
Special festival advance schemes –
Under this scheme, central government employees will get ₹10,000 interest free advance which can recovered in 10 instalments. Government restored this scheme after it had been abolished in line with the recommendations of the 7th Pay Commission. it’s expected to get consumption demand before festivals like Diwali.
₹37,000 crore additional cost for infrastructure development –
• Above the ₹4.13 trillion budget expenditure for infrastructure development within the Union Budget 2020-21, additional budget of ₹25,000 crore are going to be provided as cost to develop road, defence, water system , etc to spice up economic process .
• Another ₹12,000 crore to tend in interest-free 50 year loan to states for capital projects.