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LTC scheme an choice to avail the profit with out travelling: FinMin clarifies

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The Finance Ministry on Tuesday clarified reviews (together with one in that raised doubts over the usefulness of its LTC voucher scheme, saying it really provides authorities staff an choice to “spend on something other than travel” the cash that one could fail to assert for being unable to journey.

The ministry stated analysts elevating doubts over the scheme had been basing their arguments on the inaccurate assumption that depart journey cash could be retained by paying income-tax with out travelling.

“The government LTC is quite different from Leave Travel Allowance in the corporate sector. A person claiming LTC is not eligible unless he actually travels; if he fails to travel, the amount is deducted from his pay and he may be liable for disciplinary action. He does not have the option of keeping the money and paying income-tax,” the ministry stated in a press release.

Under the federal government system, the worker had solely two decisions: 1) Travel and spend (and the incidentals like lodge, meals, and so on. are to be incurred by him) or 2) Forgo the entitlement if not claimed throughout the date. “Now a third option to ‘spend on something other than travel’ has been given. In the current Covid environment, travel carries serious perceived health risks,” the ministry stated.

About the requirement beneath the scheme for the beneficiary to spend on items that appeal to a GST of 12 per cent or extra, the ministry stated assumptions that staff would in any other case not pay GST once they buy one thing with their cash and are solely incurring it due to the scheme is ‘shocking’.

“Everybody pays GST on their consumption, unless one chooses to buy without bills in black, a practice the government obviously does not condone. Incidentally, the entitlements under the scheme have been worked out at full cost (i.e. including the GST element in fares),” the assertion stated.

“Precisely because central government employees are least impacted in terms of savings due to lockdown and no salary loss that they are in a position to boost their own spending on goods or services of their own choice, and using the LTC money effectively can mean a steep discount to reduce the cost of whatever they choose to buy,” the assertion stated.

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