What is LTC Cash Voucher Scheme October 2020?
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Kotak Assured Savings Plan

LTC Cash Voucher Scheme October 2020 – Everything You Need to Know

LTC Cash Voucher Scheme October 2020 - Read about LTC Cash Voucher Scheme October 2020 in detail here on this article. Visit Kotak Life to know more on taxation

  • Mar 26, 2021
  • 1,771 Views

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:

  • Air travel in business class: Maximum available amount for each family member is ₹36,000.
  • Air travel in economy class: Maximum available amount for each family member is ₹20,000.
  • Rail travel (all classes): Maximum available amount for each family member is ₹6000.

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:

  • For a family of four eligible to travel by air in business class, the total LTC benefit will be ₹36,000 x 4 = ₹1,44,000.
  • Let’s assume the leave encashment amount for this employee is ‘N’ based on the DA and basic salary.
  • The LTC Cash Voucher Scheme for this employee will be 100% of the leave encashment and thrice the fare amount. This comes down to N + 1,44,000 x 3.

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:

  • A legally wedded spouse can be included. However, divorced or separated spouses are not included in the scheme.
  • Up to two legitimate children of the employee who are below the age of 25. This can include legally adopted children as well as stepchildren.
  • Parents or siblings who are financially dependent on the employee claiming the scheme.
  • Female employees can include their dependent parent in-laws.

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?

Save Tax Now

Here are some points to keep in mind:

  • As stated above, the transactions should be made using a digital mode. This can include bank transfers, debit and credit card payments, UPI, net banking, BHIM, as well as payments made through a cheque. Cash payments will not be considered.
  • Employees need to carry out their purchases after October 12, 2020, up to March 31, 2021.
  • Under the list of goods and services, the government has also included health insurance and life insurance plans for the employee and eligible dependent family members.

Kotak insurance plans that can be bought under the LTC Cash Voucher Scheme

Term insurance plans from Kotak Life

Kotak e-Term Plan

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

Kotak Health

1. A minimum sum assured of Rs.10,00,000 and a maximum sum assured of Rs.50,00,000

2. Fours covers:

  • Cancer Shield
  • Cardiac Shield
  • Liver Shield
  • Neuro Shield

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.

Download Brochure

Features

  • Increasing Life Cover*
  • Guaranteed^ Maturity Benefits
  • Enhanced Protection Through Riders
  • Tax Benefits
  • Dual Benefits: Guaranteed^Maturity + Death benefits

Ref. No. KLI/22-23/E-BB/999

T&C

Download Brochure

Features

  • Enhanced Protection Through Riders
  • Life Cover
  • Tax Savings
  • Multiple Premium Payment Terms
  • Guaranteed @ Loyalty Addion
  • Accrued Guaranteed @ Additions

Ref. No. KLI/22-23/E-BB/490

T&C

- A Consumer Education Initiative series by Kotak Life

Similar Articles

What is Rule 132 of Income Tax? How Does it Affect You?

Basics of Guaranteed Savings Plan

Presumptive Taxation for Business and Profession

How much gold can you keep at home? Limits and income tax rules explained

A Comprehensive Guide to Understand the ITR 7 Form

Income Tax Benefits for Doctors

Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

Difference between Section 80C, 80CCC, 80CCD & 80D

What is TDS Exemption Limit?

What is Tax Evasion and What Are The Penalties For Tax Evasion In India?

Section 80C Deductions as per Income Tax Act, 1961

Tax Benefits of ULIP Plans Available for NRIs

What is the Last ITR Filing Date and Penalty for Late Filing of ITR?

Financial Planning and Best investment options for Housewives

Section 44AD of Income Tax Act for AY 2021-22

Investment Proofs You Need Submit To Lower TDS Cut From Your Salary

How to File ITR Online

How to File Income Tax Return - Everything You Need to Know

Best Savings plan for the middle class in India

How to Save Income Tax with Insurance

Investing Lump Sum Amount

Understanding Tax Exemptions in ULIP (Old and New)

आयकर रिटर्न (आईटीआर) फॉर्म के प्रकार

How to e file ITR on Income Tax Government Portal

Section 80G of the Income Tax Act

5 Popular Tax-Saving Schemes in India

Budget 2019: Impact on the Common Man in India

Importance of Savings Plan You Need to Know

Sub-sections Under Section 80C of the Income Tax Act, 1961

TDS Due Dates of FY 2022-23 For Return Filing

Who Should Invest In Savings Plan

How To Save Tax Using Life Insurance?

Why January Is an Important Month for Saving Tax?

सुकन्या समृद्धि योजना (SSY) के कर लाभ क्या हैं?

What is Section 10D of the Income Tax Act?

A Complete Guide for Filing ITR 3 Form

List of Important Income Tax FAQs

Difference Between Guaranteed and Assured Returns

What Investment Options Come with Tax Incentives?

Have You Considered Term Insurance a Part of Your Tax Planning?

A Guide to Life Insurance Policy’s Tax Benefits and Taxability

Tax Saving Options for Salaried Employees

How to File Income Tax Return for First Time Tax Payers

Money Saving Tips for Single Women

What is the Difference between Form 16 and Form 16A?

9 Unusual Investments you Didn't Know for Saving Taxes in India

What is Section 195 of the Income Tax Act? TDS on Non-Residents of India

Types of Income Tax Return (ITR) Forms

Tax Exemption and Scope of Coverage

What is Form 16B?

Tax-Savings Investments and Options in India

Guide for Tax Calculation on your Salary

Challan 280 - How to Use Challan 280 to Pay Income Tax

How to Download Form 16?

How Should I Allocate A Monthly Savings Plan For Long-Term Benefits?

Tax Saving Options other than Section 80C

ITR 2 Form – Complete Guide

What are Direct Taxes? How to Avoid being Overtaxed?

Impact of GST on Life Insurance in India

What is Section 80C - Explained in Detail

What is Form 16A?

Everything You Need to Know About Tax Benefits of National Pension Scheme (NPS)

What is TDS Slab?

Income Tax Exemption for Physically Handicapped Dependent

Should one prefer a guaranteed savings plan over monthly income schemes?

Income Tax Deduction Under Section 80CCC In India

What Is Advance Tax and How Is It Calculated?

Home Investment Plan to Buy Dream Home

Financial Benefits and Government Schemes Every Woman in India Should Know

Tax Saving Tips: Best Ways to Save Income Tax for 2021

What is ITR & How to File Income Tax Return?

How to Boost Your Savings with Guaranteed Results

How to Check Income Tax Returns Status Onine?

What is Section 80CCC of the Income Tax Act 1961

What is a savings plan?

धारा 80डी आयकर अधिनियम, 1961

How to File Form 16 for Salaried Employees?

What To Do If Your TDS Is Not Deposited With The Government?

When Should TDS be Deducted and Who is Liable to Deduct it?

Section 80E: Tax Exemption on Interest on Education Loan

Tax Structure in India

Income Tax Filing For NRI in India

Income-Tax Liability- The Difference Between Gross Income & Total Income in Calculating Income Tax

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

E-Filing of Income Tax Returns in India

Saving Income tax in 2017 - 18

How to create a savings plan and make good investment choices

How to Save Tax on Salary Arrears?

What is Section 80C Deduction?

Can You Get Term Insurance Without Income Proof?

52 Weeks Savings Plan: Daily Savings Plans for a Better Tomorrow

How to Pay Advance Tax Online in India

What is indirect tax and its types?

धारा 80सी आयकर अधिनियम, 1961

Things to Do After Filing Income Tax Returns

How can I get Form 16B from traces?

What is Salary Protection Insurance and Why You Need It

Tax-Free Income in India

What are the Different Types of Taxes in India?

Excess TDS Deduction – Claim TDS Refund

How To Invest In Guaranteed Return Plans For Higher Returns And Financial Security?

Pradhan Mantri Suraksha Bima Yojana

आयकर स्लैब 2021-2022

How Much Money This Budget 2019 Can Help You Save

Income Tax Exemption for Disabled

Section 10 (10d) of Income Tax Act, 1961 on Payouts of Life Insurance Policy

Penalty For Late Filing TDS Return

Post Office Savings Scheme - All You Need to Know

How Do Assured Savings Plans Work and Why You Should Consider One?

How To Save Tax Better with 80C

Tax Saving for Self Employed in India

What is the difference between TDS and TCS?

How can NRIs prevent double taxation in India?

Top 8 Tax-Saving Methods in India- Budget Planning

Do Beneficiaries Pay Taxes on Life Insurance?

भारत में महिलाओं के लिए सरकारी योजना

Tips to plan your savings in 2022

What is Form 26AS - All You Need To Know

How to Calculate returns on an assured savings plan?

How to View 26AS and Download Form 26AS Online

What is Section 80C Deduction Limit?

Is PF Withdrawal Taxable for NRI?

Received an Income Tax Notice? Your Guide to Understanding Intimations under Section 143 (1)

What is ITR 5 Form and How to File ITR 5?

What are Deferred Savings Plans?

ITR-6: Guide to filing ITR-6 Form online

How to file Form 16 online?

How to save tax for salaried person?

How to Get Form 16?

What is the Difference Direct Tax and Indirect Tax

How to e-Verify your Income Tax Return

Tax Benefits for Startups in India

What is TDS Refund Process?

ITR 1: Sahaj Form

Are Financial Planning and Tax Planning the Same Thing?

Types of Riders in Insurance Policy

Interest Imposed Under Sections 234A, 234B and 234C

Guaranteed Return Plans-Why is it a must for you?

How to View 26AS and Download Form 26AS Online?

Should you prefer a Guaranteed Savings plan over monthly income schemes?

Section 16 of the Income Tax Act (ITA), 1961

Income Tax Deductions for Disabled Persons Under Section 80U

TDS rules on the sale of jointly owned property

Tax Planning and Tax Benefits of Life Insurance

Tax Saving Guide for 2019-20

What is HRA (House Rent Allowance) and How is HRA Exemption Calculated?

3 Tips to Buy Guaranteed Savings Plan

How to Check Income Tax Refund Status Online in India

Problems People Face with Tax Returns after a Job Change

What is the Maximum Maturity Benefit in Assured Savings Plans?

What is EEE in income tax? 5 tax-free investment options to become crorepat

All about TDS Payment Online & Due Dates

Tax Deductions You MUST Know

All You Need to Know About Section 80C

Tax Season is Coming- Know How to Save Tax

इनकम टैक्स रिटर्न कैसे फाइल करें?

Easy ways to make personal savings plans

Why is Form 16 Important?

8 Things to Help You Select a Savings Investment plan

Income Tax Deductions Under Section 80C

What is the TDS Rate on Salary?

Section 80D - Medical and Health Insurance Tax Benefits Under Section 80D

How to create wealth through a savings plan?

Save Income Tax by 31st March: Here Is a Checklist

What is the Difference between Assessment Year (AY) and Financial Year (FY)?

Tax Benefit of Investing in Term Plan

Insurance and Endowment: Everything You Need to Know!

Union Budget Highlights – 1st February 2022

Why Tax Planning Should Be an All-year Round Activity

How to File Form 10E for Tax Relief on Salary Arrears?

All You Need To Know About Assured Savings Plan

How to File Income Tax Return without Form 16

How to Check Income Tax Refund Status Online in India

What is the Percentage of Tax Deducted at Source (TDS)?

What is capital gains tax, and how it works?

प्रत्यक्ष कर और अप्रत्यक्ष कर में क्या अंतर है?

All you need to know About Tax on Inheritance

9 Income Tax Myths That Could Cost You Money while Filing returns

Income Tax Deductions & Exemptions under Sections 80C, 80D & 80DDB for FY 2021-22 & 2022-23

Income Tax Filing Using Multiple Form 16

All about TDS on Salary under Section 192 – Kotak Life

What is Tax Deduction at Source (TDS)?

How to File TDS Return?