The Central Government has decided to give cash payment of one LTC for the period 2018-21. Such a measure will encourage employees to avail themselves of it to buy goods which can help their families.
The Central Government employees get LTC in a block of 4 years in which air or rail fare, as per pay scale/entitlement, is reimbursed and, in addition, leave encashment of 10 days (pay + DA) is paid. But due to COVID-19, employees are not in a position to avail themselves of LTC in the current block of 2018-21.
An employee, opting for this scheme, will be required to buy goods/services worth three times the fare and one time the leave encashment before March 31, 2021.
The money must be spent on goods attracting GST of 12% or more from a GST registered vendor through digital mode. The employee is required to produce GST invoice to avail the benefit.
If Central Government employees opt for it, the cost will be around Rs. 5,675 crore. Employees of public sector banks and public sector undertakings will also be allowed this facility and the estimated cost for them will be Rs. 1,900 crore. The tax concession will be allowed for State Government/private sector too, for employees who currently are entitled to LTC, subject to following the guidelines of the Central Government scheme. The demand infusion in the economy by the Central Government and Central PSE/PSB employees is estimated to be around Rs. 19,000 crore. The demand infusion by State Government employees will be Rs. 9,000 crore. It is expected that it will generate additional consumer demand of Rs. 28,000 crore.
A Special Festival Advance Scheme for non-gazetted employees, as well as for gazetted employees too is being revived as a one-time measure to stimulate demand. All Central Government employees can now get an interest-free advance of Rs. 10,000, to be spent by March 31, 2021, on the choice of the festival of the employee. The interest-free advance is recoverable from the employee in a maximum of 10 instalments.
The employees will get pre-loaded RuPay Card of the advance value. The government will bear bank charges of the card. Disbursal of advance through RuPay Card ensures digital mode of payment, resulting in tax revenue and encouraging honest businesses.
The one-time disbursement of Special Festival Advance Scheme is expected to amount to Rs. 4,000 crore and if the SFAS is given by all State Governments, another tranche of Rs. 8,000 crore is expected to be disbursed.