Government’s Festival Advance, LTC schemes give impetus to digital payments

By: |
Updated: Oct 16, 2020 5:10 PM

While the Festival Advance Scheme is meant for the Central Government employees, the LTC Scheme may also be availed by state governments and private sector organisations.

digital, new business, Digital 2.0, digital technology, post-CovidWith the advent of the ‘Experience Era’, the medium has evolved to become even more critical for enterprises to understand their customers and forge meaningful relationships for the long term.

To boost the economic activities that had got satlled by Covid-19 lockdown, the Modi government has introduced two schemes – Festival Advance Scheme and LTC Scheme – which are expected to lift the festive mood and boost demand for non-essential goods during the festival season.

While the Festival Advance Scheme is meant for the Central Government employees, the LTC Scheme, apart from government, PSB and PSU employees, may also be availed by state governments and private sector organisations.

Festival Advance Scheme

Under the Festival Advance Scheme, Rs 10,000 to be paid as interest-free advance to government employees, who want to avail it, and the amount has to be paid back by the employees in not more than 10 instalments.

However, the advance of Rs 10,000 will not be paid in cash, but would be released through pre-loaded Rupay Card from SBI to be called the UTSAV card.

LTC Cash Voucher Scheme

Under the LTC Cash Voucher Scheme, the employees would get cash in lieu of Leave Travel Concession as reimbursement.

Cash in lieu of LTC to provide part reimbursement, tax benefits on spending by employees

Depending on the slab an employee is entitled to avail, he/she will get the slab amount for himself/herself and his/her family members reimbursed along with the entitled leave encashment amount, on spending three times the aggregate slab amount and the leave encashment amount.

How to Spend

As the Festival Advance of Rs 10,000 will be provided with a prepaid Rupay Card loaded with the amount, there is no option but to spend the amount digitally. Purchases may be done at a shop that accepts card payments or at online market places like Flipkart, Amazon etc.

Payments for purchases under LTC Scheme may be done digitally or by cash, but there will be no advantages for cash payments as reimbursements will be given on submission of GST invoice on purchase of goods with 12 per cent or more GST rates.

Boon for Digital Payments

As there is no advantage in cash payments, consumers availing the schemes will be in beneficial position by spending through digital mode as they may get cash backs, additional time to pay the amount spent through credit card etc. So, both the schemes would boost digital payments.

“Employees of central and state governments as well as public sector companies will be able to use these schemes to spend money on festivals of their choice till March 31. The scheme also encourages accelerating digital payments among those availing these benefits. Employees will have to provide GST invoice as this also a direct indicator for digital transactions. This translates to the impetus given to digital payments by the government and fuel consumer spending,” said Nityanand Sharma, Co-founder & CEO, Simpl, a ‘buy now, pay later’ service provider.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Diwali Bonus! Non-gazetted group ‘B’, group ‘C’ staff in Puducherry to get bonus of Rs 6,908 and Rs 1200
2Income tax return filing deadline for FY20 extended till December 31
3MF Investment: 5 ways millennials can boost portfolio returns with mutual funds