The union government has clarified that is not mandatory for central government employees to avail 20 days of earned leave every year. “It is being claimed that the government has made it compulsory for its permanent employees to take at least 20 days of earned leave every year, instead of hoarding them up for encashment,” said the government, clarifying that the media reports were wrong.
Some media reports had earlier claimed that the union government had decided to introduce a new leave encashing policy dictating all central government employees take at least 20 days of earned leave every year. The report said this had been done to prevent workers from hoarding leaves in order to get them encashed later and to promote healthy work-life balance for employees.
The claim now stands busted as the government’s media wing Press Information Bureau (PIB) fact-checked the reports and found them to be wrong.
In October 2020, Finance Minister Nirmala Sitharaman had announced an LTC cash voucher scheme for its employees. By opting for this scheme, government employees can purchase goods and services in lieu of the tax-exempt portion of the Leave Travel Concession/Leave Travel Allowance (LTA/LTC). The person can claim tax-exemption on the travel fare encashed if the amount is spent by satisfying specified conditions.
Later, the union government extended the Income Tax benefit on the LTC Cash Voucher scheme to the non-union government employees, which includes private-sector workers as well. Govt LTC is different from LTA in the corporate sector.
“The government LTC is quite different from the leave travel allowance in the corporate sector. A person claiming LTC is not eligible unless he actually travels; if he fails to travel the amount is deducted from his pay and he may be liable for disciplinary action. He does not have the option of keeping the money and paying income tax,” the finance ministry said in a note.
Under the government system, the employee had only two choices:
- Travel and spend (and the incidentals like a hotel, food, etc. are to be incurred by him) or
- Forgo the entitlement if not claimed within the date.
Now the government has offered a third option of “spend on something other than travel”. In the current Covid-19 environment, travel carries serious perceived health risks.