How to claim LTC Cash Voucher exemption in your income tax return

Due to the covid-19 pandemic, the government introduced an LTC cash voucher system in October 2020, which allowed salaried taxpayers qualified for LTC/LTA to claim the allowance tax-free without having to travel by purchasing products and services that met the scheme’s requirements.

A pandemic driven lockdown, according to the government, prevented individuals with LTC/LTA in their salary packages from travelling and claiming income tax exemption on their trip tickets. As an alternative, the government developed the LTC Cash Voucher scheme to allow such persons to claim their LTC/LTA amount as tax-exempt.

In order to take advantage of this programme, an individual required to make digital purchases of goods and services with a GST of 12 percent or more  between October 12, 2020 and March 31, 2021. Tax exempt LTA/LTC would allow the individual to claim one third of the bill’s amount as tax-free LTA/LTC without submitting any proof of travel. When completing your ITR, if you used the LTC Cash Voucher scheme in FY 2020-21, here’s how to claim the money that you received from it as tax-free.

Maximum amount that can be claimed

How do I claim the LTA Cash Voucher scheme on my tax return?

The terms and conditions of the LTC cash voucher scheme

The following conditions had to be met in order to be eligible for the LTC Cash Voucher tax exemption:

a) An employee was obliged to spend three times the considered LTC fare on products and/or services with a 12 percent or higher GST rate;

b) Goods and/or services have to be purchased between October 12, 2020, and March 31, 2021.

c) Paying for goods or services has to be done via digital modes such as a check, UPI or mobile wallets etc. We were not allowed to make payments in cash;