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FM has Announced LTC cash voucher scheme to Boost Economy during COVID-19

calendar19 Oct, 2020
timeReading Time: 2 Minutes
LTC cash voucher scheme to Boost Economy during COVID-19

Nirmala Sitharaman (Finance Minister) has announced for the (Leave Travel Concession) LTC Cash Voucher Scheme for stimulating consumer from spending among other stimulus measures to boost the economy during the pandemic of COVID-19. Due to pandemic, the government employees have NOT been able to avail any leave or travel concession, in the year block of 2018 to 2021.

Know all about LTC Cash Voucher Scheme

Under Section 10(5) of Income-Tax Act, 1961, read with Rule 2B, Income Tax exemption for LTA given to an employee. The LTA (Leave Travel Allowance) exemption can be claimed if employees are provided for travel undertaken by them or their families within India.

Central government employees will get LTC (Leave Travel Concession) in a block of four years (one to anywhere in India and one or two for hometown) in the form of air or rail fare, in accordance with pay scale or entitlement. The same is reimbursed and a leave encashment (pay + Dearness allowance) of 10 days is paid.

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Key Highlights of the Scheme

Key Highlights of the Scheme

Important Points Covered under LTC Cash Voucher Scheme

  • Due to COVID-19[1], employees were not in a position to avail of LTC in the current block of 2018-21, therefore under LTC Cash Voucher Scheme, government employees have an option to receive cash amounting to leave encashment in lieu of LTC during 2018-21 along with full payment of leave encashment and fare in accordance with three slabs depending on entitlement.
  • Under the LTC Cash Voucher scheme, the government employees has an option to receive cash amount to leave encashment plus three times the ticket fare, to buy items which attract the GST of 12 % or more and the payment needs to be made digitally.
  • Only digital transactions will be allowed and a GST invoice will have to be produced. The cash voucher scheme will generate additional consumer demand estimated at Rs 28,000 crore.


The indications are mainly that the savings of government and organized sector employees have been increased, therefore government wants to incentivise such people to boost demand for a benefit of the less fortunate. There are various tax concessions for LTC tickets available for state governments and the private sector too, so if such facilities choose to be given, then these employees too can benefit.

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