LEAVE TRAVEL CONCESSION UNDER SECTION 10(5) OF INCOME TAX ACT, 1961:
The amount exempt under section 10(5) for LTA/LTC is the value of any travel concession or assistance received or due to the assessee from his employer for himself and his family in connection with his proceedings on leave to any place in India.
Exemption is available in respect of only two journeys performed in a block of four Calendar years is commencing from 1986. The current block of four years is 2018-2021 ( i.e, 1st Jan 2018 to 31st Dec 2021)
The quantum of exemption is limited to the actual expenses incurred on the journey. In other words, without performing any journey and incurring expenses thereon, no exemption can be claimed .
The exemption is strictly limited to expenses on air fare, rail fare, and bus fare only. No other expenses like scooter / taxi at both ends, porterage expenses during the journey and lodging/boarding expenses will qualify for exemption
It is the onus of employer to keep custody of the supporting with respect to the claim by employee for leave travel concession. But as per the recent decision of the Supreme Court rendered in the case of Larsen & Toubro , it was held by the Supreme Court that the employer need not collect any supporting with respect to LTC/LTA while computing the quantum of tax deducted at source while computing the same.
However Finance Act 2015 introduced a new section 192(2D) which came after Supreme Court decision, by virtue of which the person responsible for making the payment of salary are obliged to collect the necessary evidence or proof in the prescribed form and manner to allow any claim for any deduction and/or tax. The Central Board of Direct Taxes (CBDT) has prescribed the form i.e. Form 12BB, in which salaried employees would now require to furnish evidence of claims and tax saving investments to the employer.
So the employer is obliged to maintain all supporting documents as proof of spending the amount which will be required to be submitted by the employee to the Employer.
An employee will have to give a declaration to the Employer in the prescribed form that he has spent the amount paid by the employer as LTA which will be relied by the Employer while computing the tax to be deducted at source. It is clarified that the Employer will be held responsible and it is the Employees responsibility to submit genuine declaration to the Income Tax department / company and also maintain the supporting for the Travel.
(Republished with Amendments)