LTC Cash Voucher Scheme Calculation Excel File
The Covid-19 pandemic has created many practical difficulties for all sets of people, and claiming LTC is one of the difficulties being faced by the salaried class. Like many other people, a number of Central government employees are not in a position to avail LTC as travelling within the country is practically difficult in the current Block of 2018-2021.
As per the income tax provisions, Leave Travel Concession (LTC) benefit is required to be availed by the employees within a block of 4 years. The current block for the same is 2018-2021, i.e January 1, 2018, to December 31, 2020.
“To ease the difficulties of the Central government employees, the government has introduced the LTC Cash Voucher Scheme, whereby the cash equivalent of LTC (comprising leave encashment and LTC fare) may be paid by way of reimbursement. Under the LTC Cash Voucher Scheme, government employees can opt to receive cash in lieu of LTC during the block period of 2018-21, which equals the amount of Leave Encashment plus fare, provided the employee spends a sum equivalent to leave encashment and spends a sum 3 times of the value of the fare as prescribed in the said scheme,” says Kapil Rana, Founder & Chairman, HostBooks Ltd.
This will encourage employees to avail of this facility to buy goods and services which can help their families. Some finer points related to the scheme are as below:
Cash equivalent of full leave encashment will be allowed, provided employees spend an equal amount.
The cash equivalent may be allowed if the employee spends a sum of 3 times the fare value of the deemed fare. Deemed fare for this purpose for a person are:
(1) Employees who are entitled to business class of airfare – Rs 36,000
(2) Employees who are entitled to the economy class of airfare – Rs 20,000
(3) Employees who are entitled to rail fare of any class – Rs 6,000
The employee has to purchase such items/services which carry a GST rate of 12% from a registered person through digital mode and obtain a voucher indicating the GST number and the amount of GST paid.
Who are eligible under this scheme?
All Central government employees are entitled to take the benefit of this scheme.
The benefit of this Scheme
(1) It will give LTC benefits to the employee without travelling in India.
(2) “The employee can spend this amount as per his requirement of goods/services in this pandemic situation. Therefore, now he has the option to spend money according to his requirement,” says Rana.
How to calculate the amount of cash benefit (Special Package)
According to HostBooks Ltd, cash benefit can be calculated by adopting the following steps:
A. Eligible Leave for encashment = 10 (Maximum)
B. Maximum amount for Leave encashment = Pay amount * 10/30
C. Maximum amount for Fare value = Deemed fare as given above * No. of an eligible family member
D. Maximum Total value = Amount of Point A + Amount of Point B
E. Amount to be spent for full cash benefit = Amount coming in Point A + (Amount coming in Point B *3)
F. Percentage Share of leave encashment in total = Amount of Point B * 100/Amount of Point E
G. Percentage Share of fare in total = Amount of Point C * 100 /Amount of Point E
Note:
1. If an employee spends an amount which is equivalent to the amount as per Point No. E, then, he will be allowed a cash amount equal to the amount coming in Point No. D.
2. However, if the employee spends less amount as compare to Point No. E, then he may be allowed cash amount as follows:
Leave Encashment = Actual amount spends * % coming on Point No, F
Fare value = Actual amount spends * % coming on Point No, G
Here is how it will work:
Salary for an employee: 1,55,500 p.m.
No. of members in a family: 3 Members
Eligibility of fare: Economy class air travel
Cash benefit would be available as follow:
(1) Maximum Leave encashment = (1,55,500 * 10) / 30 = Rs. 51,833
(2) Maximum Fare Value [ based on the eligibility criteria of economic air travel fare mentioned above] = 20,000 * 3 = Rs. 60,000
(3) Total Value (Full cash Benefit) = Rs. 1,11,833
Based on the finance ministry’s notification, Minimum amount need to be spent by the employee for full cash benefit = Rs. 51,833 + 180000 (Rs. 60,000*3) = Rs.2,31,833
If an employee spent less amount than Rs. 2,31,833, in this case, cash benefit shall be allowed proportionately as follow.
Assume that the employee spent only Rs 2,10,000, then
(1) % Share of leave encashment in total value = 51,833 / 2,31,833 * 100 = 22.36%
(2) % Share of fare in total value = 60,000 / 2,31,833 * 100 = 25.88%
Apply above % on the actual amount spent.
(1) Employee may be allowed 22.36% on account of leave encashment i.e. 2,10,000 * 22.36% = Rs. 46,956
(2) Employee may be allowed 25.88% on account of leave encashment i.e. 2,10,000 * 25.88% = Rs. 54,348.
(3) And Total amount payable shall be Rs. 46,956 + Rs. 54,348 = Rs. 1,01,304.
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