The government brings good news to all its employees on the occasion of festivals. On Monday, Finance Minister Nirmala Sitharaman said that the bonus will be given in advance for the expenditure to increase the demand in the economy. She announced the LTC Cash Voucher Scheme and Special Festival Advance Scheme.
What is the Special Festival Advance Plan?
The government has decided to give an interest-free advance of Rs 10,000 to all its officers and employees on festive occasions. The government has taken this step as part of a plan to increase demand in the economy by increasing consumer spending.
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How long can you spend 10,000 rupees?
This advance of Rs 10,000 will be in the form of a pre-paid RuPay card. The Special Festival Advance Scheme is available for the next six months. The money should be spent by 31 March 2021.
She said that the employees will have to spend this advance in 10 instalments. The government will spend Rs 4,000 crore on this scheme. At the same time, if the state also comes, additional consumer demand of Rs 8000 crore will be created.
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What is LTC Cash Scheme?
Every four years, the government gives LTC to its employees to travel to the desired destination. Besides, an LTC is given to them to visit their home state. LTC is exempted under the income tax act subject to certain conditions. The exemption is allowed for only two travels within a block of four years.
To boost the demand in the economy, the government has announced a cash voucher in lieu of Leave Travel Concession (LTC) to its employees this year. These vouchers can only be used to purchase non-food items that attract Goods and Services Tax (GST). The Government employees can now purchase goods and services in lieu of the tax-exempted portion of the Leave Travel Concession. The Finance Minister said that employees can use those vouchers to buy products on which the GST rate is 12 per cent or more.
Sitharaman said it is difficult for employees to travel this year due to the Covid-19 pandemic. In such a situation, the government has decided to give employees cash vouchers. They will have to be spent this by 31 March 2021.
How much will the government spend?
The government will spend Rs 5,675 crore for LTC. At the same time, the central public sector undertakings and banks will have to spend Rs 1,900 crore. The Finance Minister said that the move would generate a total demand of Rs 19,000 crore. If half the states provide these benefits to their employees, a further demand of Rs 9,000 crore would be created.