LTA (Leave Travel Allowance) is one of the salary components known to all of us but very few including the HR people have clarity on the exemption on account of LTA. Let’s have a clarity capsule on LTA & know the facts about LTA we all should know:
- This exemption is allowed for expenses pertaining to travel with family & for domestic travel only; international travel is not valid.
- You can get this exemption only if you have applied for leave and actually travelled.
- This is allowed for two journeys in a block of 4 “calendar” years (i.e Jan-Dec & not the Financial Year); Current block being 2018-2021 & next block being 2022-2025. You can make a trip only once a year for this exemption.
- In case your spouse is working, you both cannot claim the exemption for the same journey. If you make two trips in a year, you should opt out to claim one and make your spouse claim the other.
- If you switch jobs in between a block, you can get the LTA exemption from your new employer if the concession is lying unutilized for LTA from your former employer.
- The amount of the exemption would be least of the LTA received & actual travelling expenses incurred. If you want to get the LTA money from your employer without any journey, it would be taxed & paid to you.
- Exemption is only for the travel with employee’s own family i.e. spouse (even if working) & children; parents & brother/sister of employee would be covered only if they are wholly dependent on him/her. For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets). If your family travels without you, no LTA exemption can be claimed.
- The exemption is only for the “fare”; no conveyance/accommodation/food/other expenses would be eligible for the exemption.
- One unutilized LTA exemption in block of 4 years can be carried forward subject to be claimed in the first year of the next block.
- The maximum amount of the exemption would be as follows:
i. Journey by Air: Economy fare of the national carrier.
ii. Journey by Train: 1st Class train fare for the shortest route to the destination.
iii. Journey by any other mode & the origin & destination are connected by rail: 1st Class train fare for the shortest route to the destination; else the Deluxe class bus fare if the transport
iv. Journey by any other mode & the origin & destination are not connected by rail: Deluxe class bus fare if the transport system exists else 1st Class train fare for the shortest route to the destination.