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October 12, 2020

To Boost Demand FM Announce LTA Voucher and Special Festive Advance Scheme

by facelesscompliance in Income Tax

To Boost Demand FM Announce LTA Voucher and Special Festive Advance Scheme

FM Announced following

The proposals to stimulate demand are designed to stimulate demand in a fiscally prudent way

  • some of them involve advancing of expenditure, with offsetting changes later
  • others are directly linked to increasing GDP

Proposals to stimulate consumer spending has two components

LTC Cash Voucher Scheme
Special Festival Advance Scheme

The other set of proposals involves capital expenditure

Indications are that savings of govt. and organized sector employees have increased, we want to incentivize such people to boost demand for the benefit of the less fortunate

Finance Minister presenting LTC Cash Voucher Scheme to stimulate consumer spending

Under LTC Cash Voucher Scheme, govt. employees can opt to receive cash amounting to leave encashment + 3 times ticket fare, to buy something – items which attract GST of 12% or more

Only digital transactions allowed, GST Invoice to be produced

Estimated cost of LTC Cash Voucher Scheme

For Central govt. : ₹ 5,675 crore

For PSBs & PSUs: ₹ 1,900 crore

Tax concessions for LTC tickets available for state govt. & private sector too, if they choose to give such facility, these employees too can benefit

Special Festival Advance Scheme for non-gazetted employees is being revived as a one-time measure, for gazetted employees too

All central govt. employees can now get interest-free advance of Rs. 10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021

The one-time disbursement of Special Festival Advance Scheme is expected to amount to Rs. 4,000 crore; if given by all state governments, another Rs. 8,000 crore is expected to be disbursed

Employees can spend this on any festival