The scheme will generate additional consumer demand of around Rs 28,000 crore, Sitharaman said.

 

Central government employees get LTC in a block of four years -- one travel to anywhere in India and one hometown or two for home town visits. Air or rail fare, as per pay scale or entitlement, is reimbursed and in additional leave encashment of 10 days (pay and dearness allowance) is paid.

 

Due to Covid-19, employees are not in a position to avail of the LTC in the current block of 2018-21.

 

The government has therefore 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.

 

The money 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.

 

Demand infusion in the economy by central government and Central PSUs and PSBs employees is estimate to be around Rs 19,000 crore. Demand infusion by state government employees will be Rs 9,000 crore.