Tips on tax Exemption for LTC – This year budget has given the window for the Employees to avail exemption for leave travel concession (LTC) of one-third of specified expenditure or ₹36,000 whichever is less, for the block of 2018-21.
Income Tax Exemption for LTC will be provided only, if the employees have incurred expenditure on purchase of goods or services liable to GST at the rate of 12% or more. This is also mandatory to make the payment via non-cash mode i.e. only with Digital Mode and incurred during the period 12 October 2020 to 31 March 2021. The amendment is proposed to be for FY 2020-21 only.
Additionally, the government has proposed to tax the VPF contribution of more than Rs. 2,50,000. Interest income on own contributions made by an employee in excess of ₹2.5 lakh in a year on or after 1 April 2021 to provident fund is now taxable.
Also Read – How to File Form 10E for Tax Relief on Salary Arrears?
Currently, any accumulated balance is treated as tax exempt under provided the employee has rendered continuous service of five years or more.