Should you opt for the LTC cash voucher scheme? Here's how much tax you will save

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Should you opt for the LTC cash voucher scheme? Here's how much tax you will save


How much tax is saved by opting for cash voucher scheme?
As mentioned above, under the new scheme, one has to spend three times the equivalent money on goods/services attracting 12 per cent or more GST from a GST registered vendor. This means that if the amount of LTA available to you is Rs 15,000, then to claim the entire portion as tax-exempt, you will be required to spend Rs 45,000 (i.e.,3 times of Rs 15,000). So, someone in the highest tax bracket (30 per cent) will save Rs 4,680 (inclusive of cess) by opting for the scheme.


If someone has not availed even a single journey, then in such a case, opting for this scheme will result in tax savings.
However, in the current block of 2018-2021, if only one travel journey is availed. Here, you have the option of carrying forward the second permitted travel to the next block, i.e., between January 1, 2022 and December 31, 2025.

As per the office memorandum issued by the central government for its employees, the working will be as follows:
Pay of an employee Rs 1,38,500 and has a family of 4 eligible for economy class air travel.
Leave Encashment = (1,38,500 x1.7) x10/30 = Rs 54, 015
Fare Value (As entitled): Rs 20,000 x4 = Rs 80,000
Total value = Rs 1,34,015 (Rs 80,000 + 54, 015)
Amount to be spent by central government employee for full cash benefit: 54,015 + 240000 (3 x 80,000) = 2,94,015

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