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New developments through introduction of Equalisation Levy Rules and LTC Cash Voucher Scheme

When the world was introduced with the phenomenon of virtual reality, no one actually thought that 'virtual' will become such a reality! Technology is all pervasive in the way we shop, consume, entertain, communicate, analyze and more and it is this power of 'the digital' that has spread rapidly across the globe, dissolving sovereign boundaries and establishing the omnipresent empire of the digital economy. In today's highly digitized world, it needs to be acknowledged that a bulk of businesses have a website or avail of some electronic facility for undertaking transactions and payments, hazarding them to get covered under the prescribed definition of an e-commerce operator. In light of the above, CBDT has notified new equalization levy rules w.e.f October 28, 2020.
Here are some key aspects covered in the newly introduced equalisation levy rules 
  1. The payment of the levy can now be made to the Reserve Bank of India, State Bank of India or any other authorised bank, through an Equalisation levy challan.
  2. Form 1 (Rule 5 of Equalisation levy Rules, 2016) is revised to enable furnishing of statement for e-commerce supply and services and related payments through digital signatures or electronic verification code. The Form also provides an option to the taxpayer to claim refund in case of excess payment of the levy. The term “electronic verification code” has been defined to mean a code generated for the purpose of electronic verification of the person furnishing the statement of specified services as per the data structure and standards laid down by the Principal Director- General of Income-tax (Systems) or Director General of Income-tax (Systems).
  3. Form 1 is to be furnished and verified online on or before 30th day of June of the immediately following that financial year.
  4. The taxpayer will be required to obtain tax identification number (PAN) in India to furnish the statement.
  5. Forms for filling appeals also notified
  6. Form 3 – Appeal to CIT (A) - Rule 8 of Equalisation levy Rules, 2016
  7. Form 4 – Appeal to Tribunal - Rule 9 of Equalisation levy Rules, 2016
LTC Cash Voucher Scheme
The Finance Minister introduced Leave Travel Concession – Cash Voucher Scheme wherein government has decided to give cash payment in lieu of LTC during 2018-21. Currently, the block is 1st Jan 2018 to 31st Dec 2021.
Documentation Required to avail the benefits – The employee may simply file an application conveying the desire to avail the scheme.
Central Government, public sector banks and public sector undertakings employees and his family consisting of 4 family members can avail this exemption. CBDT has also extended consumption based LTC exemption to non-central government employees by issuing a press release on Oct 29, 2020 to cover employees other than central government employees for tax-exemption against LTC along with an extension to the application of Office Memorandum dated 20.10.2020.
Newly joined employees may also avail the benefit. The employees may use any one of the LTC available in a block year.
The deemed fare prescribed is as under –
  1. For employees entitled to business class of airfare : Deemed LTC fare per person (Round Trip) : INR 36,000
  2. For employees entitled to economy class of airfare  Deemed LTC fare per person (Round Trip): INR 20,000
  3. For employees entitled to rail fare  Deemed LTC fare per person (Round Trip): INR 6,000
Conditions to be fulfilled to avail the LTC Cash Voucher scheme:-
  1. The employee needs to purchase those goods or services attracting GST of 12% or more from a registered vendor through digital mode.
  2. Employee needs to procure invoice to avail the benefit.
  3. An amount equal to value of leave encashment and an amount equal to 3 times the amount of cash equivalent of deemed fare.
  4. Invoice date shall be on 31st March, 2020 or earlier than such date and the claim should also be settled before such date.
  5. Invoice shall be in the name of employee.
  6. Only domestic flights are allowed and no international flights.
  7. The use of E-Commerce platform is also available provided that the relevant invoices are also submitted.