3 min read.Updated: 12 Oct 2020, 01:45 PM IST Edited By Sangeeta Ojha
Interest free advance of ₹10,000 to be given to all central govt employees: Finance Minister Nirmala Sitharaman
Finance Minister Nirmala Sitharaman will later in the day chair Goods and Services Tax (GST) Council meeting through video conferencing
Finance Minister Nirmala Sitharaman today announced steps to stimulate consumer demand including advance payment of a part of the wages of central government employees for spending during the festival season, part of efforts to bolster the economy hit by the coronavirus pandemic.The government will also allow its employees to spend travel allowances that are an income-tax-exempt part of their salaries on goods and services,Finance Minister Nirmala Sitharaman today said while addressing the media on key economic issues. The Finance Minister's press conference comes ahead of a meeting of the GST or Goods and Services Tax Council due later in the day.
Here's are highlights of Finance Minister Nirmala Sitharaman's press conference:
-The interest-free advance of ₹10,000 under the Special Festival Advance Scheme to be paid back in 10 instalments.
-The one-time disbursement of Special Festival Advance Scheme is expected to amount to ₹4,000 crore; if given by all state governments, another ₹8,000 crores is expected to be disbursed. Employees can spend this on any festival.
-Special Festival Advance Scheme for non-gazetted employees is being revived as a one-time measure, for gazetted employees too. All central govt. employees can now get an interest-free advance of ₹10,000, in the form of a prepaid RuPay Card, to be spent by March 31, 2021
-Special Festival Advance Scheme
-Centre offers interest-free 50-year loans to States for capital expenditure for ₹12,000 crores, consisting of three components.
-Employees will get pre-loaded Rupay Card of the advance value
-Govt will bear Bank chrges in this regard
-On a conservative basis, we expect the LTC Cash Voucher Scheme to generate additional consumer demand in the range of ₹28,000 crore.
-Even if 50% of the states opt to give this facility, we think that this will bring in ₹9000 crores.
-Estimated cost of LTC Cash Voucher Scheme
For Central govt. : ₹ 5,675 crore
For PSBs & PSUs: ₹ 1,900 crore
Tax concessions for LTC tickets available for state govt. & private sector too, if they choose to give such facility, these employees too can benefit.
-Under LTC Cash Voucher Scheme, government employees can opt to receive cash amounting to leave encashment plus 3 times ticket fare, to buy items which attract GST of 12% or more. Only digital transactions allowed, GST invoice to be produced.
-Consumer spending related proposal has two components- LTC Cash Voucher scheme and Special Festival Advance Scheme.
-The proposals being presented are designed in a way that they can stimulate demand by front-loading/advancing some of the expenditure with some offsetting changes. Others are directly linked to an increase in the GDP.
-COVID-19 pandemic has adversely affected the economy. The needs of the poor and the weaker sections have been addressed in the Atma Nirbhar Bharat package. Supply constraints have somewhat eased but consumer demand still needs to be given a boost
-Today we have some proposals to stimulate demand in the economy
-Finance Minister Nirmala Sitharaman's press conference on economic issues begins.
GST Council meeting today
Finance Minister Nirmala Sitharaman will later in the day chair Goods and Services Tax (GST) Council meeting through video conferencing. The meeting will take place at 4 pm.
Earlier this month, in a crucial meeting, the GST Council failed to reach a consensus on ways to compensate states as the panel was split over using borrowing as a tool.
Briefing reporters after a marathon meeting of the panel, Finance Minister Nirmala Sitharaman said 21 states had opted for one of the two options the Centre had previously suggested for borrowing to meet the shortfall in GST collections.
But some states did not opt for any of the two options, and the Council decided for more deliberations, she said.
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