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LTC Scheme: Now Insurance Premiums Paid Also Eligible For Reimbursement

By Staff
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According to the Ministry of Finance, premiums paid for insurance policies purchased between 12 October 2020 and 31 March 2021 will be eligible under the leave travel concession (LTC) cash voucher scheme introduced last month for central government employees.

The beneficiaries need not submit original bills of their purchases in order to avail reimbursement under the scheme and self-attested copies would do instead, it said.

LTC Scheme: Now Insurance Premiums Paid Also Eligible For Reimbursement
 

It is the latest addition to the set of frequently asked questions (FAQs), the finance ministry answered the query on whether premiums paid for existing insurance policies would be eligible. It clarified that while premiums paid for existing insurance policies would not count, those made towards fresh policies purchased during the specified period would be eligible.

On whether it was mandatory to submit original bills to claim warranty or ownership of the items or services purchased, the ministry said that self-attested photocopy would suffice. "However, the original bills may be produced on demand for information."

To push consumption in the coronavirus-ridden economy, the central government on 12 October announced a scheme for payment of cash allowance equivalent to LTC fare to central government employees subject to fulfilment of certain conditions.

The scheme was introduced to make use of the unused LTC for the current block of 2018-21 that would otherwise lapse since employees could not fully utilise it due to disruptions caused by COVID-19.

The incentive can be used by employees to buy goods/ services worth 3 times the fare and 1 time the leave encashment before 31 March 2021. Since the cash allowance of LTC fare is in lieu of deemed actual travel, the same would be eligible for income-tax exemption on the lines of existing income-tax exemption available for LTC fare.

The payments for such purchases have to be made via digital mode or cheque, demand draft, NEFT/RTGS.

Read more about: ltc nirmala sitharaman
Story first published: Thursday, November 26, 2020, 17:53 [IST]
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