As per the provisions of section 10(5) of the Income-tax Act, 1961, an exemption of the value of leave Travel Concession/Assistance received by the employee from his employer is provided subject to fulfillment of prescribed conditions. Rule 2B provides for the specified conditions to be fulfilled. One of the conditions is that the exemption can be availed only in respect of two journeys performed in a block of four CALENDER YEARS.

The concept of “Calendar year” was introduced in the year prior to 1989 when there was no uniform Previous Year. Since 1989 uniform Previous Year has been introduced i.e. April – March. To be in line with the concept of “financial year” adopted by other provisions of the Income tax Act, it is suggested that the concept of calendar year should be replaced with financial year (April – March) i.e. the calculation of block period shall be shifted from Calendar year to Financial Year.

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To be in line with the concept of “financial year” adopted by other provisions of the Income tax Act, it is suggested that the concept of calendar year should be replaced with financial year (April – March).

Source- Pre-Budget Memorandum 2014 on direct taxes by Institute of Chartered Accountants of India

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Category : Income Tax (25154)
Type : News (12613)
Tags : ICAI (2179) LTA (12)

0 responses to “Leave Travel Concession- Replace “Calendar year” by “Financial year”: ICAI”

  1. mahesh says:

    This is a good move, giving LTA exemption creates lot of confusion and difficult for payroll persons to explain

    A small suggestion, if accepted, will save lot of persons time and energy:

    1.Make LTA yearly once instead of twice in the block of 4 years
    2.Fix LTA amount say Rs.10000/- max (irrespective of how many have travelled)
    3.Remove all the confusion regarding – least route from the start point to the farthest point that is reached. Here calculation becomes hassel free

    Kindly see if this is implemented

    Thanks
    Mahesh

  2. vikas singhal says:

    Indeed a good idea / suggestion, THis calendar year concept creats confusion & moreover the LTA should be given on air ticket also.

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