The Finance Minister of India, Nirmala Sitharaman, announced measures to inject liquidity in the hands of masses with the plan to have the economy jumpstarted after the lull induced by COVID-19 lockdown measures. The same is intended to be achieved by enabling and encouraging spending and demand during and after the festive season.
Speaking at a press conference, the minister said that the
Centre will launch ‘LTC (Leave Travel Concession) Cash Voucher Scheme' and
‘Special Festival Advance Scheme'.
The key points from the decisions are:
Government employees can opt to receive cash amounting to leave encashment plus 3 times ticket fare, to buy items which attract GST of 12% or more. Only digital transactions allowed, GST invoice to be produced
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The LTC cash voucher scheme to generate additional consumer demand in the range of Rs 28,000 crore
A special interest-free 50-year loan to states for Rs 12,000 crore capital expenditure
Additional budget of Rs 25,000 crore (in addition to Rs 4.13 lakh crore given in Budget 2020) is being provided for capital expenditure on roads, defence, water supply, urban development and domestically produced capital equipment
All central govt. employees can now get an interest-free advance of Rs 10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021
Rs 10,000 special festival advance to all its employees
The government has made full cash payment on leave encashment and payment of fare in three flat-rate slabs depending on class of entitlement, including making the fare payment tax free.
An employee opting for this scheme, would be required to buy goods or services worth 3X the fare and one time the leave encashment before March 31, 2021.
To ensure government’s share in the spending, the money availed must be spent on goods attracting GST on 12 per cent or more from a GST registered vendor through digital mode and GST invoice will be required to be produced.
Sitharaman said that if central government employees opt for its, cost will be around Rs 5,675 crore. Employees of PSBs and PSUs will also be allowed this facility and the estimated cost for them will be Rs 1,900 crore.
The tax concession will be allowed for state governments and private sector too, for employees who currently are entitled to LTC, subject to guidelines in the Central Government scheme.
The government has timed the revival attempt of the economy
with the festive season.