As per the scheme, individuals could claim payment of LTA/LTC as tax-exempt on the basis of submission of bills of specified expenditure during a specified period.
As per the scheme conditions, in order to become eligible to claim the tax exemption, an individual was required to submit all the relevant bills to his/her employer on or before March 31, 2021.
Now, what happens if the bills were not submitted to the employer before the March 31 deadline under the LTC Cash Voucher Scheme?
As per chartered accountants, the Income-tax Act, 1961 is silent on whether the tax-exemption on LTC Cash Voucher Scheme can be claimed at the time of filing ITR.
However, many tax experts that ET Wealth online spoke with said that one can claim the LTC Cash Voucher tax exemption at the time of filing ITR in case the bill submission deadline was missed. Here is what they had to say and how one can claim the exemption at the time of filing ITR.
Also Read: How to claim LTC Cash Voucher Scheme in ITR
S. Vasudevan, Executive Partner, Lakshmikumaran & Sridharan, an Indian law firm specializing in taxation matters, says, “Considering the pandemic situation, an employee was allowed to claim exemption towards leave travel concession for FY 2020-21 even based on expenditure incurred on goods and services, which are liable to GST at a minimum rate of 12%, subject to certain other conditions. An employee was required to submit proof of incurring specified expenditure to the employer to claim this exemption at the stage of deduction of tax at source (TDS). If for any reason, an employee was unable to submit such proof to the employer resulting in higher TDS, he can still claim the exemption at the time of filing return of income, provided the expenditure was incurred between October 12, 2020, and March 31, 2021. The employee must retain proof of specified expenditure incurred so that the same may be submitted during the course of assessment proceedings, if required.”
Abhishek Soni, CEO of Tax2Win.in, an ITR filing website says, “There is no clarity with respect to claiming LTA cash voucher exemption at the time of filing of ITR if an individual forgot to submit the bills to the employer. There are two possible views on this. The first view is that if an individual couldn’t submit the bills to the employer on time, then he cannot claim LTA exemption. However, another possible view can be that if due to any unavoidable reason, the individual missed the deadline to submit the bills to the employer then he can claim LTA exemption at the time of filing of ITR. However, he/she may need to submit bills in the future if the assessing officer demands the same.”
Sujit Bangar, Ex-IRS officer and founder of Taxbuddy.com, an ITR filing website says, “The income under salary head is computed after taking into account the tax-exemption on the allowances and perks (if eligible). LTA is an allowance on which tax exemption has to be claimed. Further, LTA has to be a part of your CTC and included in Form 16 of the employee as taxable portion. There may be cases where employee has missed submitting bills to employer, inadvertently. In such cases, if LTA allowance is included in Form 16 as taxable portion, then taxpayer can claim this exemption even while filing ITR, provided all other conditions of GST invoices and no cash payment are fulfilled. This way excess TDS can be claimed as refund in ITR.”
Parizad Sirwalla, Partner and Head, Global Mobility Services – Tax, KPMG in India says, “With an intention to offer relief to the employees and boost consumption in the economy on account of the hardship caused due to COVID-19, the Government introduced the LTC cash voucher scheme last year in lieu of Leave Travel Concession exemption available under the Income-tax Act. As per the design of the scheme, an employee who opted for this scheme was entitled for a tax-free reimbursement from the employer, subject to specified limits/ conditions, basis submission of the bills/ invoices of the purchase of eligible goods and services between 12th October 2020 until 31st March 2021. The employer was required to validate the bills for processing of such reimbursement. In case an employee has failed to submit the necessary bills to the employer, it seems difficult to claim the tax exemption under this scheme while filing the tax return, as there is no express guidance from the Government in such a situation.”
Do keep in mind that the government had extended the date of submission of bills/claims by all ministries/departments employees to May 31, 2021. However, no such extension was given to the private sector employees. As per the office memorandum issued by the Department of Expenditure on May 7, 2021, “Queries have been received in this department to extend the date for submission of bills/claims and settlement beyond 30th April 2021. Keeping in view of the situation existing due to Covid-19 pandemic, it has been decided that submission of bills/claims may be entertained and settled by Ministries/Departments not later than 31st May 2021.” Click
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