LTC Voucher - One time opportunity to spend on Hifi for tax planning

[arunkvivek]

I did not see a thread on this topic and hence decided to post about this. This is meant for Salaried Class folks. Am sure that many in private sector are submitting proofs for tax computation around this time of the year. I am sure many are aware about the LTC voucher that was announced for Central Government employees. This was subsequently extended to private sector as well.
The scheme is straightforward and can be availed if you have bought anything new from dealers after 31st Oct. Please check this post. Since all the hifi goods fall under 28% tax bracket, you get approx 1/3 exemption on income tax (works like LTA) if you meet the criteria. I finished all my spends before the window and cannot avail. It is not necessary to buy AV gears. The rule says that any goods or services carrying 12% or higher GST. Washing machines, painting houses, cars bikes etc will all fall in this bucket. But, since most of us have the weakness to hifi gears, just tempting the FMs, "why not do it for country's sake and also for tax planning's sake?"

Disclaimer: Please double check with your CAs about it before scratching the itch caused by this post!!!

 

[sanjivnayak]

Good info.

 

[Nitin K]

Thanks for the info Arun. This may give at least some benefit since the gst set off cannot be taken advantage by those not having a gst no.
Can a person avail this benefit even on the purchase of mobile phones ?

 

[arunkvivek]

Thanks for the info Arun. This may give at least some benefit since the gst set off cannot be taken advantage by those not having a gst no.
Can a person avail this benefit even on the purchase of mobile phones ?

Yes, I think so. Check with your company payroll person if they are collecting proofs for this category. My employer has added this category for IT proof selection. 36K per person in the family. My company system allows parents to be treated as dependants and I have no kids.. So I am eligible for 36K X 4 = 1.44L benefit if I have spent >= 4.32L ~ 1.44L X 3 (3 times the eligible amount). Let's say I bought a mobile for 20K, I think I should be eligible for 1/3rd ~6K reduction in taxable income. I do not know the exact definition of dependent. So, it would be better to have your personal accountant or payroll person involved. That could determine how much benefit you would get.

 

[Nitin K]

Yes, I think so. Check with your company payroll person if they are collecting proofs for this category. My employer has added this category for IT proof selection. 36K per person in the family. My company system allows parents to be treated as dependants and I have no kids.. So I am eligible for 36K X 4 = 1.44L benefit if I have spent >= 4.32L ~ 1.44L X 3 (3 times the eligible amount). Let's say I bought a mobile for 20K, I think I should be eligible for 1/3rd ~6K reduction in taxable income. I do not know the exact definition of dependent. So, it would be better to have your personal accountant or payroll person involved. That could determine how much benefit you would get.

Thanks a lot for the detailed explanation.

 

[Mukul77]

Thanks for the info.

 

[ktks1]

Thanks for the info. But it looks like no one is clear about the scheme and the process involved. I asked a couple of CAs and they were unsure as well.
@arunkvivek have your expenses been considered for tax savings already? Please let us know.

 

[arunkvivek]

submitted the proofs. waiting for it to get approved by payroll guys. They would do it in the next pay cycle. Fingers crossed!!!

 

[sam0x]

submitted the proofs. waiting for it to get approved by payroll guys. They would do it in the next pay cycle. Fingers crossed!!!

any update did you save taxes

 

[arunkvivek]

any update did you save taxes

They have got approved.

 

[RaahulT]

As per my understanding,

1. This scheme is for salaried persons Pvt or Govt who are entitled for LTC.
2. LTC for last two block years can be availed as deemed LTC.
3. No need to take leave as per earlier norms.
4. Period of scheme is between 12 Oct 20 to 31 Mar 21.
5. Need to spend on goods or services which are taxed at of above 12% GST.
6. Expenses can be shown at the time of ITR also. Vouchers should be between above period only.
7. Extension of scheme not announced yet. Seems unlikely too.
8. Calculated maximum allowed amount per person is Rs. 36k, 3x spending = 108k.
9. On spending 108k, 36k is deducted from Taxable income and Appx tax saved considering 30% tax bracket 10.8 k per eligible person in family.
10. So app 10% can be saved on total spending.

 

[dillihifi]

For govt or where the ltc amount is reimbursed there will be nett receipt of 36k per person (as per eleigibility)or 20k per person and u need to buy 3x so a saving of 33%