 "No additional compliance burden on private firms for LTC scheme: Fin Sec")
Private sector companies offering the benefit of the new LTC cash voucher scheme to its employees will not have to undertake any additional compliance burden, Finance Secretary Ajay Bhushan Pandey said.
Companies as per statute are required to maintain records of travel and other documents submitted by employees for availing LTC.
Under the new scheme, employees will have to submit to their companies bills indicating expenditure of an amount 3-times of the LTC. The companies as in past will maintain the records and only submit them to Income Tax Department if sought for.
The government had on October 12 allowed payment of cash allowance equivalent to LTC fare to the central government employees subject to fulfilment of certain conditions.
It was also provided that since the cash allowance of LTC fare is in lieu of deemed actual travel, the same shall be eligible for income tax exemption on the lines of existing income tax exemption available for LTC fare.
Last week, Income Tax Department extended the I-T exemption available under the LTC cash voucher scheme to employees of private sector.
More From This Section
Asked how the scheme would work for private sector, Pandey said whatever accounting and record keeping rules for theLeave Travel Concession (LTC) are there for employees, the same would apply for the LTC cash voucher scheme.
Even today for LTC, private company employees were getting tax exemption and whatever accounting and record keeping rules are there, the same has to be done.
Earlier also for the employees who had actually travelled (LTC), the travel records etc had to be maintained in the office in the private sector and if the I-T Department needed it for verification, these things were made available to the auditors of the company and then to the I-T Department. So there is no additional compliance burden for companies or employees, Pandey said.
The conditions listed out by the Central Board of Direct Taxes (CBDT) for availing tax exemption under the LTC cash voucher scheme include the requirement of the employee to spend a sum equal to three times of the value of the deemed LTC fare on purchase of goods / services.
Such goods or services would have to carry a GST rate of 12 per cent or more and the payment would have to be made through digital mode between October 12, 2020 to March 31, 2021.