Income Tax Exemption: Experts Want Extension To LTC Scheme In Budget 2022. Know Details About The Scheme Here

Budget 2022 Income Tax: Under LTC Cash Scheme, tax exemptions can be availed by the employees for travel concessions, leaves, buying of goods and services etc. Experts have recommended extending this scheme till March 31, 2023, in the upcoming budget.

Written by: India.com Business Desk Edited by: Raghav Aggarwal

Published: January 21, 2022, 1:58 PM IST

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7th Pay Commission: If the fitment factor is increased by 3 times, then the salary of the employees excluding allowances will be 18,000 X 2.57 = Rs 46,260.

Income Tax: Under the Income Tax Act, 1961, taxpayers are given a tax exemption for the value of travel given to them by their employers. The government came up with the LTC Cash Voucher Scheme as a replacement for the travel and leave concessions in 2020. According to a report in The Economic Times, experts have recommended extending this scheme till March 31, 2023, under the upcoming Union Budget 2022-23. The scheme is also applicable for health insurance and life insurance plans.

Under LTC Cash Voucher Scheme, employees can claim refunds of leave and travel while filing the income tax return. Under leave encashment, the employees are entitled to get an amount as an award for the number of leaves they did not take in the year. Under the travel concession, the government and employer award the family of the employee with travel expenses, domestically.

During the COVID-19 pandemic, the employees could not travel due to restrictions and claim tax exemption. So, the experts are demanding an extension to the scheme. The tax benefits can also get benefits on the purchase of goods and services like Vehicles, household appliances, mobile bills etc.

What is LTC Cash Voucher Scheme?

• Under the scheme, tax exemptions can be availed by the employees for travel concessions, leaves, buying of goods and services and premiums paid for buying health insurance and life insurance policy.
• The purchase can only be made via digital mode. Cash payments are not eligible for deduction.
• The scheme is available for 2018-2021. The goods must be purchased before March 31, 2021. Experts are demanding an extension of this deadline.
• Reimbursement of the premium paid on the insurance plans is eligible for deduction under the scheme.
• The employee must spend three times the value of the maximum LTC limit.
• For leave encashment, employees must spend 100 per cent amount to avail the benefit under the scheme.
• The employee must provide bills and proofs of receipt to avail of the benefits.
• Travel fare benefit can be opted but leave encashment benefit is optional.