Kotak e-Term Plan
Kotak e-Term Plan provides a high level of protection to your loved ones in your absence.
Kotak Guaranteed Savings Plan
Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality.
Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs.
Kotak Health Shield
Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability.
Kotak Lifetime Income Plan
Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime!
The year 2020 brought travel to a standstill. With the Covid-19 pandemic, lockdowns were imposed across the length and breadth of the country, and people were confined to their homes. Travel was out of the question, and some people even struggled to get back to their hometowns.
Government as well as private-sector employees are given a Leave Travel Allowance (LTA), also known as the Leave Travel Concession (LTC), as part of their salary composition. Since people could not travel at all, the government has offered an LTC Cash Voucher Scheme, so that employees do not miss out on the benefits of LTC.
Here’s everything you need to know about LTC and the LTC Cash Voucher Scheme.
What is LTC?
Leave Travel Concession or LTC is a salary benefit given to the government and private employees for travels made to their hometown with their family members twice in four years. Travels made with family members can include a spouse and up to two children. Dependent parents and siblings travelling with the employee can also avail of this benefit. Depending on the income of the employee, the employee can claim either air or rail travel reimbursements for their expenses. Some employees can also opt for leave encashment for up to 10 days.
LTC is a tax-exempt benefit up to the authorized air or rail fare. The maximum available fares are as follow:
Employees can multiply this by the number of family members to know the maximum fares applicable to the family. For instance, for a family of three, the maximum available amount for rail travel would be ₹6,000 x 3 = ₹9,000.
What is the LTC Cash Voucher Scheme?
The LTC Cash Voucher Scheme was announced in October 2020. Under the scheme, employees can claim a cash payment in place of LTC during the years 2018 to 2021. The cash payment can be used to buy goods and services that are equivalent to the value that is three times the fare and one time the full leave encashment before March 31, 2021. Moreover, the goods and services bought should come with a Goods and Service Tax (GST) of 12%. In addition to this, only digital transactions will qualify for the scheme, and the employee availing of the scheme needs to produce a GST invoice to support their purchase.
Employees who have availed the full amount of their LTC during 2018 and 2021 cannot use the LTC Cash Voucher Scheme. So, for employees who may have travelled before the pandemic and claimed LTC, the scheme stands null and void.
How can employees calculate the amount to be claimed under the LTC Cash Voucher Scheme?
The calculation of the LTC Cash Voucher Scheme is based on the employee’s salary, including the basic pay and DA (dearness allowance). The eligibility of each employee for the type of travel, i.e. air (business class and economy class), train, etc. is also a determinant here.
Here’s an example of how employees can calculate their LTC cash voucher amount:
Who qualifies to be an eligible family member under the LTC Cash Voucher Scheme?
The following family members are eligible for the LTC Cash Voucher Scheme:
What happens if both spouses are eligible for the LTC Cash Voucher Scheme?
If both the spouses are eligible to claim the LTC Cash Voucher Scheme, in this case, the couple can calculate their cash amounts as per their specific incomes, produce the relevant invoices, and avail of the cash benefit individually
What happens if the employee does not spend the entire amount on purchasing goods and services?
If the entire amount is not spent on purchases, the employee will still be eligible to claim the benefits of the scheme. However, in this case, the allowance and tax benefit will be given out on a pro-rata basis.
Is there a limit on the number of items or services an employee can purchase under the LTC Cash Voucher
There is no fixed limit on the number of goods and services purchased as long as they are bought after October 12, 2020, and before March 31, 2021. The entire amount can be spent on one item, or the employees can buy a number of items as per their unique needs and wants.
What kind of items can the employee purchase under the LTC Cash Voucher Scheme?
An employee can purchase any item with a GST of at least 12% or more. This can include physical goods and services.
Is the LTC Cash Voucher Scheme available to employees who opt for the new tax regime?
Since the rules of the new tax regime mandate that the employee cannot take certain tax exemptions and deductions, the LTC Cash Voucher Scheme cannot be claimed by an employee opting for the new tax regime to file their income tax return.
Can the LTC Cash Voucher Scheme be claimed partially?
Yes, the LTC Cash Voucher Scheme can be claimed partially.This implies that a part of it can be used to purchase the required goods and services, and the other half can be used for travel purposes.
What are the taximplications of the LTC Cash Voucher Scheme?
The tax benefits of the LTC Cash Voucher Scheme are the same as LTC. Employees can avail a tax exemption up to the qualified amount.
What are some important points to keep in mind while availing the LTC Cash Voucher Scheme?
Here are some points to keep in mind:
Kotak insurance plans that can be bought under the LTC Cash Voucher Scheme
Term insurance plans from Kotak Life
A Minimum sum assured amount of ₹25,00,000
No limit on the maximum sum assured
Regular, Limited & Single Pay premium payment options
Yearly, half-yearly, quarterly and monthly premium payment modes
Enhanced protection with riders like:
o Kotak Permanent Disability Rider
o Kotak Critical Illness Plus Rider
Health insurance plans from Kotak Life
1. A minimum sum assured of Rs.10,00,000 and a maximum sum assured of Rs.50,00,000
2. Fours covers:
3. Daily hospital cash benefit
4. Waiver of premium benefit on being diagnosed with a minor health condition
5. Personal accident and permanent disability cover
6. Income benefit on being diagnosed with a major health condition
To sum it up
The LTC Cash Voucher Scheme is a benefit that can be of an advantage to both employees as well as the government. While employees do not lose out on claiming LTC due to the lockdown and restrictions on travel, the government and the economy too benefit by boosting the sale of goods and services with or above a GST of 12%. Moreover, the process to claim this scheme is easy, transparent, and employee-friendly. This is also a boon for people who may be looking to buy expensive electronics, home improvement products, etc.