New Delhi | Jagran Business Desk: In a big relief for lakhs of salaried class people across the country, the Centre has said that central government employees won't have to pay income tax on the amount received against the leave travel concession (LTC). The announcement was made by Finance Minister Nirmala Sitharaman while presenting the Union Budget 2021 in the Parliament on Monday.

"In order to provide relief to employees, it is proposed to provide tax exemption to the amount given to an employee in lieu of LTC subject to incurring specified expenditure," the Finance Minister had said, as reported by Zee Business.

Notably, the central government in October last year had announced this scheme for those who were unable to claim their LTC tax benefit because of restrictions on travelling due to coronavirus pandemic. The scheme was extended for non-government employees later.

According to experts, Centre's decision to exempt central government employees from paying income tax on the amount received against LTC will allow them to spend on eligible goods and services to "optimise their taxes and achieve higher net pay".

Last year, the Centre had also said that central government employees can submit multiple bills of goods and services purchased in their own name to avail the benefit of the LTC cash voucher scheme.

It had also issued a set of frequently asked questions (FAQs), clarifying that an employee can also avail the scheme utilising the applicable LTC fare without leave encashment. In its FAQs, the Centre had also said that this scheme is applicable to the LTC fare left unutilised during the block year (2018-21).

"Since this is an optional scheme, if the LTC fare of any member of the family has not been utilised for this purpose, those members can avail LTC subject to extent instructions under LTC rules," the government had said.

"The purchase should carry a GST of 12 per cent and above and payment should have been made through digital mode," it added.

Posted By: Aalok Sensharma