LTA spend linked to Consumer Spend : Is this practical ?

 

 

Context :

Tax relief for private company staff too for LTA spends on consumer goods   /    15 Oct

 

Extract :

Ø  Private sector employees who opt to spend their leave travel allowance on the purchase of consumer goods, along the lines of the latest scheme unveiled for central government employees, will be eligible for tax exemption.

“Tax benefit would be available… Mechanism is being examined and a clarification would be issued shortly,” a government official told ET.

Ø  The government is keen to ensure that private-sector employees are also nudged to take advantage of the scheme that seeks to prop up consumer demand. The government expects this incentive to the private sector will generate additional consumer demand of Rs 28,000 crore.

 

Ø  One of the measures gave Central government employees an option to avail of their Leave Travel Concession ( LTC ) if they spend three times the entitlement on goods or services attracting a GST rate of 12 % or more by March 31, 2021

 

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 Dear concerned Govt Officer / Income Tax Officer ,

 

I believe there are some 4 crore tax-payers in our country

 

To be able to “ claim “ this tax exemption, each one of them would need to keep / submit following ( Online / Offline ? ) :

 

Ø  What goods / services were purchased ( did these attract GST @ 12 % rate ? )

Ø  Who ( shop / company / individual person ) was the SELLER ( full details )

Ø  When was the purchase made ( date )

Ø  What was the bill amount ( with Bill Number )

Ø  How was the payment made ( details of Cash – Cheque – App payment – Digital bank transfer etc )

Ø  Tabulated summary of ALL the Bills / Payments( from today till 31 March 2021 )

 

 

QUESTIONS :

 

Ø  How will this work in a “ Faceless Online Tax Regime “ ?

Ø  Will all these data need to be entered ONLINE ( on IT dept portal ) – with photo-images of bills ?

Ø  Will each claim get examined closely for correctness of data furnished ?

Ø  Will close examination slow down the assessments ?

Ø  How will accountants ( of Private Company employers ), decide how much TDS for each claimant ?

Ø  Is Company Accountant responsible to verify THREE TIMES SPEND on Consumer Goods / Services ?

 

 

I am sure, there are many other questions that  I have missed out – including :

 

Ø  Will this exercise end up costing more than its presumed benefits ?

Ø  Would it not have been better to just enable LTC payments WITHOUT any linkage ? Just take and do what you like !

 

With regards,

 

Hemen Parekh /  hcp@RecruitGuru.com  /  Oct 15 , 2020