Leave Travel Concession/Allowance (LTC/LTA)

Leave Travel Concession/Allowance (LTC/LTA)

Leave Travel Concession (LTC) is a type of benefit provided to employees by their employers to travel within the country during their leave period. The objective of this benefit is to encourage employees to take a break from work and explore new places while spending quality time with their family. The LTA/LTC scheme was introduced in the year 1986 by the Government of India to help employees working in government or public sector undertakings to travel and enjoy their time off. The scheme has since been extended to employees of private companies as well. Under the scheme, an employee can claim reimbursement for the travel expenses incurred during the leave period. The reimbursement is subject to certain conditions and restrictions, such as the distance of travel, the mode of transport used, the number of family members traveling, etc. The employee is required to submit the travel bills and other supporting documents to the employer to claim the reimbursement.

What is Leave Travel Allowance?

Leave Travel Concession (LTC) is a benefit provided by employers to their employees to travel within the country during their leave period. The objective of this benefit is to encourage employees to take a break from work and explore new places while spending quality time with their family.

Section 10(5) of the Income Tax Act, 1961 with Rule 2B ensures the exemption of tax and also details the conditions subject to tax exemption. Income tax provision has laid down rules for claiming exemption of LTC/LTA which are provided below.

Conditions for Claiming LTC/LTA

Let us understand the conditions/requirements for claiming the exemption.

• Actual journey is a must to claim the exemption
• Only domestic travel is considered for exemption, i.e., travel within India. No international travel is covered under LTC/LTA
• The exemption for travel is available for the employee alone or with his family, where ‘family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee.
• Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restrictions. Further, in cases of multiple births on a second occasion after having one child is also not affected by this restriction.

Eligible LTC/LTA Exemption

The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTC/LTA provided by the employer.

For example, if LTA granted by the employer is Rs 30,000, and the actual eligible travel cost incurred by the employee is Rs 20,000, the exemption is available only to the extent of Rs 20,000, and the balance of Rs 10,000 would be included in taxable salary income.

Exemption w.r.t various modes of transport

Procedure to Claim LTC/LTA

The procedure to claim LTA is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc., along with the mandatory declaration. Though it is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit them to the employer based on the LTA policy of the company/to tax authorities on demand.

Frequently Asked Questions

Who is eligible for LTA?

LTA/LTC is usually available to employees of government or public sector undertakings, as well as employees of private companies who have been granted this benefit by their employers. 

What exactly does Leave Travel Allowance cover?

Leave Travel Allowance covers only the travel expense incurred during the travel.

Can LTA exemption be claimed for Vacation on Holidays?

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organisations may reject LTA claims for travel on official holidays or weekends.

 How often can an employee claim LTA?

An employee can claim LTA/LTC twice in a block of four years. The current block of years is from 2022 to 2025.

What is the minimum trip duration under LTA/LTC?

According to Rule 8 of the Central Civil Services (Leave Travel Concession) Rules, 1988, an employee must undertake a journey of a minimum of three days to be eligible for the LTA/LTC benefit. The rule further states that the journey should be undertaken to a place that is different from the place of work and the employee’s residence. This rule applies to employees of the Central Government and is also followed by many State Governments and Public Sector Undertakings.

It is important to note that the LTA/LTC rules may vary for employees of private companies and other organizations. Employers may have their own guidelines and policies regarding the LTA/LTC scheme. Employees should check with their employer to understand the specific rules and conditions applicable to them.

How can an employee claim LTA/LTC?

To claim LTA/LTC, an employee must inform their employer about their proposed travel plans and apply for leave. The employee must then submit the travel bills and other supporting documents to the employer within a stipulated time frame. The employer verifies the documents and reimburses the employee for the eligible expenses.

What happens if an employee does not utilize the LTA/LTC benefit?

If an employee does not utilize the LTA/LTC benefit during the block of years, they can carry it forward to the next block of years. However, the employee must utilize the LTA/LTC benefit within the first year of the next block of years. If the benefit is not utilized within the stipulated time frame, it will lapse. 

Can LTA/LTC be availed for international travel?

No, LTA/LTC can only be availed for domestic travel within India.

Can an employee claim LTA/LTC for travel to their hometown?

Yes, an employee can claim LTA/LTC for travel to their hometown, provided that the hometown is located at a distance from the place of work and the employee’s residence.

Can an employee claim LTA/LTC for travel during their probation period?

Generally, employees who are on probation are not eligible for LTA/LTC. However, some employers may have their own policies on this and may allow employees on probation to claim LTA/LTC.

Can an employee claim LTA/LTC for travel by a private car?

Yes, an employee can claim LTA/LTC for travel by a private car, subject to certain conditions. The reimbursement amount is usually limited to the amount that would have been paid if the employee had travelled by public transport.

Can an employee avail of LTA/LTC for travel during the notice period?

An employee can avail of LTA/LTC during the notice period, provided that they have already applied for and obtained leave for the travel period before the notice period begins.

Can an employee claim LTA/LTC for travel to attend a family function?

No, an employee cannot claim LTA/LTC for travel to attend a family function, such as a wedding or a funeral. LTA/LTC can only be availed for travel during the employee’s leave period for the purpose of leisure travel.

Can an employee carry forward unutilized LTA/LTC to the next block of years?

Yes, an employee can carry forward unutilized LTA/LTC to the next block of years, but they must utilize it within the first year of the next block of years.

Can an employee claim LTA/LTC for travel to a foreign country if they travel by land or sea from India?

No, an employee cannot claim LTA/LTC for travel to a foreign country even if they travel by land or sea from India. LTA/LTC is only applicable for travel within India.

Can an employee claim LTA/LTC for travel during a period of leave without pay?

No, an employee cannot claim LTA/LTC for travel during a period of leave without pay. LTA/LTC can only be availed during the employee’s leave period.

Is there a limit on the amount that can be claimed under LTA/LTC?

Yes, there is a limit on the amount that can be claimed under LTA/LTC. The reimbursement amount is usually limited to the actual expenses incurred by the employee, subject to certain conditions and restrictions.

Can an employee claim LTA/LTC for travel expenses incurred for their dependents?

Yes, an employee can claim LTA/LTC for travel expenses incurred for their dependents, such as their spouse, children, and parents. However, there may be restrictions on the number of dependents who can travel.

Can an employee claim LTA/LTC for travel to multiple destinations?

Yes, an employee can claim LTA/LTC for travel to multiple destinations, provided that the total cost of travel does not exceed the eligible amount.

Can an employee claim LTA/LTC for travel to attend a business conference or seminar?

No, an employee cannot claim LTA/LTC for travel to attend a business conference or seminar. LTA/LTC can only be availed for leisure travel during the employee’s leave period.

Can an employee claim LTA/LTC for travel by a rented vehicle?

Yes, an employee can claim LTA/LTC for travel by a rented vehicle, subject to certain conditions. The reimbursement amount is usually limited to the actual rental charges paid by the employee.

Can an employee claim LTA/LTC for travel if they are on medical leave?

No, an employee cannot claim LTA/LTC for travel if they are on medical leave. LTA/LTC can only be availed during the employee’s leave period for leisure travel.

Can an employee claim LTA/LTC for travel during the first year of their employment?

Generally, employees who are in their first year of employment are not eligible for LTA/LTC. However, some employers may have their own policies on this and may allow employees in their first year of employment to claim LTA/LTC.

Can an employee claim LTA/LTC for travel if they have resigned from their job?

An employee can claim LTA/LTC if they have resigned from their job, provided that they have already obtained leave for the travel period before their resignation. The reimbursement amount will be subject to certain conditions and restrictions. 

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Disclaimer:  This document is strictly private, confidential and personal to its recipients and should not be copied, distributed or reproduced in whole or in part, nor passed to any third party. The views expressed in this write-up are matters based on our understanding of the law and regulations prevailing as at the date of this write-up and our past experience with the tax, regulatory and other authorities as may be applicable. However, there can be no assurance that the tax authorities or regulators will not take a position contrary to our views.