Introduction: Leave Travel Allowance (LTA) under Section 10(5) of the Income Tax Act serves as a significant employee benefit. This article provides a comprehensive understanding of LTA, exploring its particulars, the State Bank of India vs. ACIT judgment, and practical aspects for claimants.
Leave Travel Allowance (LTA) is an allowance provided by the employer to the employee either in the form of reimbursement of travel expenses incurred by the employee OR in the form of Fixed allowance. Hence where an individual is receiving LTA then he can claim exemption u/s 10(5) of the Income tax Act.
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Particulars |
Description | Judgement |
| Concept | Under this option, a salaried individual can avail an exemption in respect of the journey taken by an individual and family member.
(Journey must be performed in India) Journey taken
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State Bank of India Vs ACIT (Appeal No. 8181 of 2022)
Held that : Where the travel plan of an individual involves the journey started from India and end in India but involved travel with a Foreign leg also, then it is not considered as a Travel in India and can’t be eligible for exemption u/s 10(5) of the Income Tax Act. Despite of the fact that the individual raised a claim of their travel expenses between the two points in India. |
| Nature of LTA/LTC | Value of any travel concession or assistance due or received from current or previous employer by an individual for himself and his family in respect of journey to be performed. | It must be noted that the travelling expenses of only family member is not allowed where individual claiming exemption was not present. |
| No of journey | This exemption is available for two journey performed in a Block of 4 years. (Current Block- 2022-2025) | |
| Quantum of exemption | Where the journey is taken by
(i) airways– limited to the economy fare from the shortest route to the place of destination in India. (ii) railways– limited to the amount of air conditioned First class rail fare from the shortest route to the place of destination. (iii) other than rail or airway– (iiia) recognized public transport– limited to the amount of first class or deluxe class fare (iiib) unrecognized public transport– same as the fare with rail, as if journey taken from rail Note:-The exemption is limited to the amount actually spent by the employee on travel ticket. |
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Nature of expenditure allowed |
Expenses incurred on Travel ticket only. (It doesn’t include accommodation, hotel booking & Food charges etc)
(Payment for travel tickets must be made by an individual through proper banking channel) |
Form No. 12BB required to be submitted by the employee to the employer furnishing evidence of travel expenses incurred. |
| Carry Forward of exemption | Where the individual has not claimed LTA exemption in a Block of 4 years, it shall be carry forward to the succeeding Block of next 4 calendar years, which has to be claimed in the First calendar year of the succeeding Block of 4 years. | |
Explanation:
- Family in relation to an individual means-
(i) Spouse and two surviving children of the individual. (child includes adopted child or step child) (further after one child if there is twins or triple , it still be counted as one )
(ii) Parent, brother or sister of the individual wholly or mainly dependent on the individual
Conclusion: Navigating the intricacies of LTA under Section 10(5) demands clarity. This article aims to decode the complexities, offering insights into exemptions, key judgments, and practical considerations for individuals seeking to claim LTA benefits.
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