Giving major boost to common man ahead of the festive season, the government on Monday announced a Special Festival Advance Scheme along with several other measures. Under the scheme, the Central government employees can claim a one-time Rs 10,000 interest-free festival advance. The scheme has been announced as part of plans to increase consumer spending to spur demand in the economy which has suffered a blow from the pandemic.
The finance minister said that the festival advance was discontinued from 6th Pay Commission for central government employees. However, it has been re-introduced as a one-time measure, as an interest-free advance will be given to all officers and employees of the central government.
How to claim?
The government announced said that Rs 10,000 advance will come as a pre-paid RuPay card, which can be availed and spent by March 31, 2021. The Interest-free advance of Rs 10,000 will be recoverable in maximum 10 instalments. It is recommended to restore festival advance to govt employees for festivals up to 31st January 2021.
The government expects to disburse Rs 4,000 crore on this scheme. If given by state governments, another Rs 8000 crore is likely to be disbursed. Assuming 50% adoption by states the estimate is Rs 4,000 crore.
LTC cash voucher scheme
Another announcement came in form of a LTC cash voucher scheme under which the employees will be given cash vouchers in lieu of leave travel concession (LTC) fare. These vouchers could be spent only on buying non-food GST-rated items. Finance Minister Nirmala Sitharaman said the employees could buy items that attract 12% or more goods and services tax (GST). These purchases will have to be made in digital mode from GST-registered outlets. In lieu of LTC during 2018-21, full payment will be made on Leave encashment and payment of fare in 3 flat-rate slabs depending on the class of entitlement. Fare payment will be tax-free.