Two weeks after it announced the LTC (Leave Travel Concession) voucher scheme as part of its consumption-boosting measures, the India government on Thursday extended the income-tax exemption available under the LTC cash voucher scheme to non-central govt employees, which include employees of state governments, state-owned enterprises and the private sector.

Accordingly, the payment of cash allowance, subject to a maximum of Rs36,000 per individual as considered Leave Travel Concession fare per person (Round Trip) to non-central government employees will be allowed income-tax exemption subject to fulfilment of conditions, the Central Board of Direct Taxes (CBDT) said in a statement.

The ministry's statement explained that "as this exemption is in place of the exemption provided for LTC fare, an employee who has exercised an option to pay income tax under concessional tax regime under section 115BAC of the Income-tax Act, 1961 shall not be entitled to this exemption.”

Under the new income tax regime, introduced for the current FY, taxpayers can choose for lower tax rates if they do without all exemptions. To push consumption in the Covid-induced economy, the central government on 12-October has announced a scheme for payment of cash allowance equal to LTC fare to central government employees subject to fulfilment of certain conditions.  The scheme was introduced to make use of the unused LTC for the current block of 2018-21 that would otherwise lapse since employees could not fully utilise due to disruptions caused by COVID-19.

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