Incidently on Monday i.e. Monday, this year’s Nobel Prize for Economic Science or Economics was announced and yesterday the Finance Minister of India made an announcement that won the same award last year.
Millions of government employees will be happy with the announcement made by Finance Minister Nirmala Sitharaman on Monday. All the shopkeepers will be happy. Industrialists and big businessmen will also be happy and all those economic experts will also be happy who have been demanding for a long time that the government should arrange to put money directly in the pockets of the people.
The Finance Minister said that two facilities are being given to government employees.
One, they will be given an interest free loan of up to ten thousand rupees and secondly, the amount of leave to travel, ie, their leave travel concession or LTC will be paid this time without moving around.
There is a condition of taking advantage of both of them. The condition is that they will have to spend this money till 31 March 2021 and also spend only on those things on which the GST rate is 12 percent or more.
Relief for middle class in Corona Time
The condition is also that only digital payment should be used for this purchase. This benefit will not be available on cash purchase. The government will give a loan of ten thousand rupees in advance or without interest as a prepaid ‘RuPay Card’.
Government employees and officers can buy up to ten thousand rupees from this card before March 31, and whatever amount is spent on the card will be recovered in the next financial year by deducting it from salary in ten equal installments.
This is the first news since the Corona crisis and lockdown which is not only giving relief to the middle class but also making them happy. Cash vouchers in lieu of LTC will also be given cash vouchers for every employee or officer in LTC.
This amount will be equal to LTC eligibility or three times the amount of rent. The condition here is that a receipt will be required to spend three times the amount of voucher you will get, only then it will be able to get income tax exemption and here too the same conditions like prepaid card are applicable.
That means before March 31, the expenditure should be on digital medium and only on items with more than 12 percent GST.
Profit and loss
The question is, what is the benefit of this scheme and what is the disadvantage?
So first of all, the biggest benefit – if all the government employees think of taking advantage of LTC scheme, then the amount of 5675 crore rupees will go to the employees’ account from the government treasury. If government companies and banks are also included, then the amount of 1900 crores will be added to it.
From the perspective of the scheme, all this money should be spent in the market by March. If you look at the conditions more closely, you will find that the amount spent in the market will be much more than this.
Those taking advantage of LTC scheme have to understand that there are two parts of the amount received in LTC. The amount of leave encashment, which is paid in lieu of a holiday, has to be paid on it. And the second part is the fare to go on vacation – it is tax free.
Now the government has placed a condition that it is necessary for tax exemption on this that the employee will spend three times the amount of the rent, only then he will get full money and tax rebate.
A ticket is also required to be submitted while submitting LTC claim. At this time, the employees cannot go around, so the government has given them a discount that they should take the ticket part without going anywhere. But then the question will arise that in such a situation, where will I get the ticket from?
So the government has given the answer. The amount of rent has been fixed for people with different salaries. Those who get air fare for business class will get Rs 36 thousand, those in economy class will get Rs 20 thousand and for those traveling to any class by railway, the fare will be Rs 6000.
But to take full advantage of the scheme, they will have to spend three times the cost of the voucher.
There is an example in the government circular itself in which mathematics is shown by adding. One lakh thirty eight thousand five hundred rupees salary officer with a family of four members. Their holiday payment will be Rs. 54015, according to twenty thousand fare eighty thousand.
That means the total amount received was Rs 134015. But to take advantage of the rebate, they have to spend three times the rent i.e. two lakh forty thousand rupees and the full payment of holidays i.e. 54015 rupees.
Two birds with one stone
It is clear that the government has shot two shots with one stone. The staff officer is happy to hear that money will come in his pocket. The private sector has also been requested that if they pay with this math, their staff will also get tax exemption.
If the four-year block for LTC is ending next March, many people want to take their LTC too. Now if they want to take advantage of the rebate, then they will have to spend twice as much as they get.
Loan without interest is to be returned to all people next year. So more than what the government gave, we made arrangements to get it out of your pocket.