Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. An LTA is the remuneration paid by an employer for Employee’s travel in the country, when he is on leave with the family or alone. LTA amount is tax free. Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B (Commonly known as LTA Rules), provides for the exemption and outlines the conditions subject to which LTA is exempt. Through this write-up, I want to shed light on the taxability and some other interesting relevant aspects which you as a salaried employee must keep in mind.
Exemption of Fare Only As per LTA Rules, LTA exemption can be claimed where the employer provides LTA to employee for leave to any place in India taken by the employee and their family. Such exemption is limited to the extent of actual travel costs incurred by the employee. The total cost of the holidays is not covered, only the travelling cost is covered.
Travel within India only allowed- As per LTA Rules, travel has to be undertaken within India and overseas destinations are not covered for exemption.
Exemption on Actual Travel Expense – For example, where an employer provides LTA of Rs. 25,000, but an employee spends only Rs. 20,000 on the travel cost, then the exemption is limited to only Rs. 20,000. Travel cost means the cost of travel and does not include any other expenses such as food, hotel stay etc.
Meaning of Family for LTA :– As per LTA Rules, the meaning of ‘family’ for the purposes of exemption includes spouse and children and parents, brothers and sisters who are wholly or mainly dependent on you. An individual would not be able to claim the exemption in relation to his parents, brother or sisters unless they are wholly or mainly dependent on the individual.
Restriction on Number of Children for Claiming LTA :- As per LTA Rules, exemption is not available for more than two children of an individual born after October 01, 1998. This restriction does not apply in respect of children born before this date, and also in cases where an individual, after having one child, begets multiple children (twins or triplets or quadruplets, etc.) on the second occasion. The term “Child” includes a step-child and an adopted child of the individual.
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Is LTA exemption available every year?
No. The LTA rules provide for an exemption only in respect of two journeys performed in a block of four calendar years. The current block runs from 2018-2021. If an individual does not use their exemption during any block on any one or on both occasions, their exemption can be carried over to the next block and used in the calendar year immediately following that block.
In such cases, the journey performed to claim such exemption will not be counted for the purposes of regulating future exemptions allowable for the succeeding block. For example, Mr. X joins an organisation on April 1, 2016 and is entitled to a LTA of Rs 30,000 per annum (financial year 2016-17).
X undertook a journey in December 2016 and used his exemption. However, for his LTA entitlement for 2016-17, he did not undertake a journey during the calendar year 2017.
He can undertake the journey in 2017 to claim the exemption in relation to the LTA. He would also be able to use the LTA benefit for two other journeys which he can undertake in the current block 2018-21 in relation to his LTA entitlement for future years.
Proof of travel to claim LTA
Supreme Court has held in the case of Larsen & Toubro and ITI that employers are under no statutory obligation to collect bills and details to prove that the employees had utilised the amounts obtained against these claims on travel and related expenses.
Employers while assessing the travel allowance claims, do not need to collect proof of travel to submit to the tax authorities. Though it is not mandatory for employers to demand proof, they still have the right to demand documentary proof depending on its policy. The Judgement of Supreme Court has only moved the responsibility from the employer to the employee, the assessing officer can still ask for the employee to provide details of travel.
The individual however needs to keep copies for his or her own records. Such proofs are helpful at the time of the audit of the tax return of the individual. Proof of travel could be, for example, tickets, boarding passes, invoice of travel agent, duty slip etc .
Here we would like also to draw attention of the employers to Circular No. 8/2013 dated 10-10-2013 which says that in respect of LTA The employer has to satisfy the obligation that leave travel (fare) concession is not taxable in view of section 10(5) the employer is not only required to be satisfied about the provisions of the said clause but also to keep and preserve evidence in support thereof. In our opinion the circular failed to take into account SC Judgment in the case of Larsen & Toubro and ITI and Employer are not bound to mandatorily preserve the Documents.
During the Fringe Benefit tax (FBT) regime, provision of paid holidays, including travel cost to any place, stay expenses etc. were subject to FBT in the hands of employers and were not taxable in the hands of individuals. Many employers extended the paid holiday benefit instead of LTA.
Now with the elimination of FBT , with effect from. April 1, 2009, paid holiday benefit is fully taxable in the hands of employees and, therefore, employers are reintroducing the LTA element by withdrawing the paid holidays benefit.
Does claiming LTA in alternate years mean that the two year entitlement gets added together?
It does. If you are entitled to an LTA of Rs.10,000 per year and do not utilize it for the the first year it is carried forward to the next year. In the second year you can claim the entire amount (Rs.20,000) as tax exempt provided you spend it according to the specification in LTA tax laws as detailed above.
Carry over concession for Leave Travel Allowance
Leave Travel Allowance (LTA) comes with a carry forward feature. You can carry forward your Leave Travel Allowance in the situation that it has not been used. It can be brought forward and claimed in the first year of the next block. Here we would like to mention that only one LTA can be brought forward and claimed in the first year of the next block. For instance, “the 4-year block for your LTA is 2014-2017. During that period, if you did not claim LTA or claimed it only once, then you will be allowed to carry forward one LTA to 2018 (first year of next block, i.e. 2018-21). Thus, from 1st Jan 2018 to 31st Dec 2021, you will be able to claim LTA three times. However, if you do not claim the LTA (brought forward from the previous block of 2014-17) in the first year of the current block (1st Jan 2018 to 31st Dec 2018).
Can I Claim LTA Twice in a Year
Though you can claim two journeys in a block of four years, you can claim the LTA benefit just once in a year. You cannot claim both the journeys in one year. So, while a person can get an income tax exemption for two journeys in a block of four calendar years, he can make a trip only once a year. If you make two trips in a year, you lose one. One way out is to claim one and make your spouse claim the other in case your spouse is also working.
LTA in case of Switch of JOB
If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilised. Let’s say that, in the 2010-13 block, you claimed LTA in 2011. In 2012, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.
Amount Exempted under LTA Rules
1. Journey performed by Air – Economy Air fair of National carrier by the shortest route or the amount spent which ever is less will be exempt
2. Journey performed by Rail – A.C. first class rail fare by shortest route.or amount spent which ever is less will be exempt.
3. Place of origin and destination place of journey connected by rail but journey performed by other mode of transport other than air- A.C. first class rail fare by shortest route or amount spent which ever is less.
4. Place of origin & destination not connected by rail(partly/fully) but connected by other recognised Public transport system – First class or deluxe class fare by shortest route or amount spent which ever is less.
5. Place of origin & destination not connected by rail(partly/fully) and not connected by other recognised Public transport system also – AC first class rail fare by shortest route (as the journey had been performed by rail) or the amount actually spent ,which ever is less.
Extract of Section 10(5)
“Section 10(5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—
(a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;
(b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,
subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :
Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.
Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—
(i) the spouse and children of the individual ; and
(ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;
Conditions for the purpose of section 10(5) as Prescribed in Rule 2B of Income Tax Rules- Extract of Rule 2B
2B. (1) The amount exempted under clause (5) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,—
(a) on leave to any place in India;
(b) to any place in India after retirement from service or after the termination of his service, shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely :—
(i) where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination;
(ii) where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and
(iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be :—
(A) where a recognised public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and
(B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail.]
(2) The exemption referred to in sub-rule (1) shall be available to an individual in respect of two journeys performed in a block of four calendar years commencing from the calendar year 1986 :
=[Provided that nothing contained in this sub-rule shall apply to the benefit already availed of by the assessee in respect of any number of journeys performed before the 1st day of April, 1989 except to the extent that the journey or journeys so performed shall be taken into account for computing the limit of two journeys specified in this sub-rule.]
(3) Where such travel concession or assistance is not availed of by the individual during any such block of four calendar years, an amount in respect of the value of the travel concession or assistance, if any, first availed of by the individual during first calendar year of the immediately succeeding block of four calendar years shall be eligible for exemption.
Explanation : The amount in respect of the value of the travel concession or assistance referred to in this sub-rule shall not be taken into account in deter-mining the eligibility of the amount in respect of the value of the travel con-cession or assistance in relation to the number of journeys under sub-rule (2).]
[(4) The exemption referred to in sub-rule (1) shall not be available to more than two surviving children of an individual after 1st October, 1998 :
Provided that this sub-rule shall not apply in respect of children born before 1st October, 1998, and also in case of multiple births after one child.]
Republished with amendments
Image courtesy of bplanet at FreeDigitalPhotos.net
Author Bio
Is it compulsory that Employee should start her / his travel from his work location for the LTA claim ? is it under the IT rule ? pls. suggest
If I quit a company before completing a year , do I lose my LTA or can I take it after paying tax.
Dear Sir,
With regards to LTA exemption, I have few queries –
1. Is the entire amount of the tour package is exempted? For instance, if the tour package is for Rs. 30000/- of which Rs. 5000/- is traveling expense, Rs. 20000/- is lodging expense and Rs. 5000/- is food expense. Then, is entire amount of Rs. 30000/- exempted?
2. If I have traveled in January 2012 then can I apply for LTA exemption in the current financial year (April 2012 – March 2013)?
Regards,
Mohit
Can LTA be claimed by a foreign national working in India if he is given Leave Travel allowance as per his pay structure?
Hi,
Am I liable for tax exemption for LTA by providing Car hiring receipt / bills.
Kindly suggest.
Regards,
Sanjay Nikam
I have recently joined a new organisation. Can i claim LTA for travel done prior to joining the company.
Also, my travel was through both mediums – rail and air. Can i claim the total cost incurred for travel through both rail and air. To explain it more clearly – my ultimate destination was, say place Z. I stay at place X. there is no direct mode of travel from X to Z. Thus i took a train from X to another place Y and than from Y to Z via air.
Pls advise.
Dear Bhumika, I took a custom package for leave travel, it includes both i.e. cab rental & hotel stay expenses. Am i eligible for whole amount exemption?? Kindly confirm.
Do we need to submit bills for LTA..?
Can I claim the exemption for the journey in Dec2012 for the not claim LTA amount for Financial year 2010-2011,2011-12,2012-13?
hi,
I took LTA in the year of June 2009 (Calender year), in that year only i got eligibility .
now 2010-2013 block is running and my LTA eligibility amount is 35000 per annum..
in this block only i claimed LTA in May-2010 and June 2011. my claiming eligibility over for running block.
my question is will i get money Rs63000 (after deducting tax) after the block is over (i.e. at the end of December 2013)? if yes, i have to request for it to my finance department or it will come itself?
– Basavaraj
Hi ,
I have a simple question, If i am travelling from place A to place B using Air , then from Place C to place C using taxi/bus.Then can I claim the LTA from Place a to Place C ,if i have the all the required bills and taken the PL for 3 days.
-Sumit gambhir
Dear Experts,
I am working in energy sector . In my company the company giving the LTA per year .
can i give the LTA to employees on yearly basis.
Regards
Mangesh
what will be the treatment if the journey to say Goa is undertaken partly by rail and partly by flight
Hi, Please clarify a doubt, I have the LTA Limit of Rs. 50 Thousand per year and i took the LTA benefit during the FY-2010-2011 (Oct-Nov 2010), now again i would like to avail the same, am i eligible to do so. Looking forward to hear from your side soon
Can one avail LTA benefit while on maternity leave / paternity leave / compassionate leave ?
is LTA only paid after completion of the financial year.
example i have completed one year in the company and have to clame the second LTA after 2 years. so will the LTA be calculated on the basis on calender year or financial year.
Sir, i went to kashmir from Ahmedabad in june 11 in make my trip holiday package of Rs 57000/- which includes airfare. i want to claimthat in LTA but how can i segregate airfare from Holiday package.Also i was in AXIS till Sep and then moved to IDBI.How can i claim my LTA.
Working in a ltd. co. where there is no bifurcation of allowances as LTA, Education, Magazine, Conveyance etc. but I get it under the head as Additional Allowances. I come under IT and lumpsum allowances given is also taxable so how do I claim LTA exemption or can I myself presume and take exemption on certain percentage of my allowances. Please reply ASAP.
Hi,
I have taken journey with a 5 days PL in March’2011, but did not claimed the any tax benefit for the FY 2010-2012. Can I submit the claims ( bills dated March’2011) for the current FY.
Also I would like know, whether I can avail two exemptions in the same financulay Year, ie the claims of march’11 and 2nd one done during the FY 2011-2012.
Regards,
Benny
Hi,
Whether the Proof of Travel is required. There was a ruling from supreme court that no documentary proof will be required from Employee.
is this position taken by the Company is Ok.
Dilip
If I have traveled with proper PL Leave in the Month of Jan-Feb 2011, Can I claim the LTA (As non-taxable) in Current FY that is after Mar-2011 and before End of March 2012 ?
Hi,
If the employer is the proprietor of the company, as an individual can he claim LTA tax benifit.
LTA IS TAXABLE OR NOT IF ARE THE TAXABLE THEN WHAT IS TERMS AND CONDITIONS IF ARE NOT TAXABLE ?
Hi,
Me & My husband both are working in the same company. We both have not claimed LTA last year so we both want to claim this financial year. But my company fellow told me, only one can claim LTA if husband and wife both are working in the same company.
They are not able to show such clauses and we are also not able to find such clauses. But they are not accepting our declaration for LTA.
I understand this is not claiming same exemption twice so we both can claim. I will take my parents on vacation and my husband will take his parents and we 6 will go at same place for a vacation at same time. Please tell me whether it is possible or not? and let me know any such clauses are there?
Thanks & Regards,
Hi,
may i want to know the travel should be round trip only for claiming of LTA, am i right?
Dear Sir,
Suppose that Empo.is no taxable salary from 2009-10( fY)
and 2010-11 is taxable salary and Take the LTA 2010. and also take the 2008-09 and 2007-8, this case the LTA 2010-11 is taxable or exmption
bdy
1) Whether LTA Advance has to be taken mandatorily to claim LTA benefit?
2) IF LTA is paid in monthly salary for 12 months & can we claim the LTA benefit in year end? Will this allow the IT dept?
I have not used LTA during 2006-2009, looking to travel in Feb 2011 – will my journey considered for 2006-2009 or 2010 to 2013. if i claim LTA ..
In your example, suppose the employee recd Rs. 30000/- as LTA for FY 2009-10 but he did not undertake any journey till July 2010 and filed his ITR considering the entire amount of LTA as taxable. He go for journey in Oct. 2010. Now how he can claim exemption of that journey against the LTA received for FY 2009-10.
I have one more query, in block of 2006-2009, suppose an employee is getting LTA every year. He go for a journey in Feb. 2007. Will that journey be considered for FY 2006-07 or FY 2007-2008? Further, suppose any employee has claimed exemption for one journey in block of 2006-2009. In FY 2009-10, he go for a journey in Sept. 2009 and another journey in Jan. 2010. In this case, he can claim exemption for journey undertaken in Sept 2009 for calender year 2009 in his ITR for FY 2009-10. Can he claim exemption for journey did in Jan. 2010 against LTA received for FY 2010-11 as it is a journey falling in calender year 2010 in block period 2010-13?
rply pl
Sir,
I Sreenivasulu chedubavi, working as finance manager in NGO. Our organisation have been giving one extra salary per year to staff it is treating as LTA and Medical allowance.
As per LTA rule, only two trips in four years. How to cover the LTA for whole period 2010-13.
Kindly help me in this matter.
Thanks and regards
Sreenivasulu
9966530684
That was good…. can anybody provide me with the LTC Declaration form
Hi ,
If I travel on weekends and do not apply leave for travel am I entitled for LTA ?
Please reply.
Reply to Kumar :-
You was entitled to claim 2 tax free journeys only upto Dec 2009.
As the new block started from Jan 2010. Again you will be eligible for 2 tax free journeys upto Dec 2013.
Hi,
This is Kamal, actually i joined new job on 1st dec 2008. Iam eligible for LTA of Rs.12000/PA, before that i have worked in some other company. In the slot of 2006-2009 i have not claimed any LTA can i claim now. Last year(2009)i have spend an amount of Rs. 20000 for the leave travel allownance.
waiting for ur reply…….
thanks
Hi,
I joined my first job on 13 November 2009. I am eligible for LTA of Rs. 18000 per year. I worked only for about 1.5 months in the last block 2006-2009. So am I eligible for an additional claim in this block i.e. 2010-2013?
Please reply… Thanks
i have not claimed LTA for 2006,2007,2008 and is it lapsed or can be recovered
I am salary person and could not submit my IT return for 2009-10. However, my organisation deducted tax from my Income for 2009-10. Would it be possible for me to submit my tax for 2009-10 during current fiscal. Any penalty is there due to late submission of IT return.
I have joined the organisation on 5th May’2009 and want to claim LTA of 2 yrs i.e. 2009-10 & 2010-11. Is LTA amount to be claimed would be exempted or not.
I have claimed 2010-11 LTA in 2010. But I havent claimed 2009 LTA till now. As you explained can I claim 2009 LTA in 2010.But in 2010 I have already claimed 2010-11 LTA.What shall I do?
Can LTA give to the employees on monthly basis means total amt of LTA (yealy amt) distribute in 12 months and give to the employee on monthly basis. Is it right or wrong?
PLEASE COMMENT ON THE QUERY ASKED BY MR. ATUL GUPTA POSTED ON 03.05.2010 AS I HAVE THE SAME QUERY ALSO.
IF I MAKE THE PAYMENT FOR THE TRAVELLING OF MY CHILD AND MY CHILD IS KEEPING THE PROOF OF THE TRAVELLING, WILL MY CHILD CAN CLAIM FOR THE LTA FROM HIS SALARY
MY QUERY:
IF AN EMPLOYEE TRAVEL TO ANY PLACE IN INDIA AND UTILISE HIS SICK LEAVE AND WEEKENDS FOR THE TRAVEL. WILL HE ENTITLED FOR LTA. HE DO NOT APPLY FOR LEAVE IN THE OFFICE FOR TRAVELLING.
AJAY
Can I claim the exemption for the journey done in Jan 2010 by the LTA received during the Financial year 2010-2011?
what about the encashable LTA which some organisations follow and give the choice to the employee to either claim LTA or take encashment? what is the limit of such encashment?
I understand now no proof is required to claim LTA.
Proof of travel not required for claiming LTA: Supreme Court
Employers, while assessing the conveyance and leave & travel allowance (LTA) claims of their staff, are under no statutory obligation to collect supporting evidence and furnish them to tax authorities, the Supreme Court said on Wednesday.
A bench comprising Justice SH Kapadia and Justice Aftab Alam said that assessee employers are under no statutory obligation to collect bills and details to prove that the employees had utilised the amounts obtained against these claims on travel and related expenses.
According to prevailing rules, if claims on LTA and conveyance are not supported by journey bills, they would be taxed. For instance, on an LTA allowance of Rs 1 lakh, if documentary proof such as air tickets, taxi vouchers and other public transport bills are submitted only for Rs 50,000, then tax is applicable on the rest of the amount.
Regardless of the amount an executive is entitled to as LTA, tax laws allow air tickets only in the domestic sector for the claim.
The apex court order came in a plea by companies including Larsen &Toubro and ITI. In its defence, the revenue department had argued that assessee companies were under statutory obligation under Income Tax Act, 1961, and relevant rules, to collect documentary proof to show that their employee(s) had actually utilised the amount paid towards the leave travel concession and conveyance allowance.
Rejecting the plea, the court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”
This is still a good news thinking about how employees can benefit from Leave Travel Allowance. Thanks for writing about this.
Pls confirm from the FY 10-11 as per the budget LTA is allowable every year
In your example, suppose the employee recd Rs. 30000/- as LTA for FY 2009-10 but he did not undertake any journey till July 2010 and filed his ITR considering the entire amount of LTA as taxable. He go for journey in Oct. 2010. Now how he can claim exemption of that journey against the LTA received for FY 2009-10.
I have one more query, in block of 2006-2009, suppose an employee is getting LTA every year. He go for a journey in Feb. 2007. Will that journey be considered for FY 2006-07 or FY 2007-2008? Further, suppose any employee has claimed exemption for one journey in block of 2006-2009. In FY 2009-10, he go for a journey in Sept. 2009 and another journey in Jan. 2010. In this case, he can claim exemption for journey undertaken in Sept 2009 for calender year 2009 in his ITR for FY 2009-10. Can he claim exemption for journey did in Jan. 2010 against LTA received for FY 2010-11 as it is a journey falling in calender year 2010 in block period 2010-13?
Thanks & Regards
hi,
but from the FY 10-11 as per the budget LTA is allowable every year. can you cofirm the same?