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.
Page Contents
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
Hi
I travelled to Bangalore to Delhi by Air Cost is Rs 10000 and again from Delhi, I took CAR, travelled to Manali, Shimla and Agra and Back to Delhi cost is Rs 19000. Back to Bangalore from delhi again by Air Rs 10000
Now my question is can i claim LTA amount = Rs 39000 fully or only air fare Rs 20000.
Thanks in advance.
Hi,
Please refer to Circular No. 8/2012 [F.NO. 275/192/2012-IT(B)] dated 5-10-2012 on section 192 of the IT Act, 1961.
It specifies that exemption shall not be available if the family members are travelling separately without the employee who is not on leave. It further states that section 10 (5) states that the exemption will be available as per the Central Govt. rules for LTA, as per which, journeys undertaken separately by the assessee and his family members at different points of time will be reckoned as one journey. So, while LFC eligibility is there, tax exemption is not there for family members who travel separately from the Assessee.
In light of the above, please clarify whether tax exemption is available in the following two situations:
1. Employee’s family avails LFC during March while the employee was on sick leave. The employee avails LFC in the subsequent month.
2. Employee and her family avail LFC during the same period but they travel to different destinations separately.
If I travel from Chennai ( my work location)-kolkata-Chennai and parents travel from Delhi-kolkata-delhi… Journey dates are same. Can I avail LTA on the total travel cost of me and my parents?
Hello,
i want to know about LTA,i work in hyderabad. first i travelled from Hyderabad to Jaipur then Jaipur to Srinagar and came back from Srinagar to Jaipur and then Hyderabad. can it be treated as one journey?
i traveled in 2011.but i am not claimed the LTA at that time.
can i claim the same in 2014 for tax exemption.
Hello Sir,
we are take LTA April-13 (Jan-12 to Dec-12) and Dec-13 (Jan-13 to Dec-13) so please explain me we are take taxble amt yearly One or Two
please replay
How many days of minimum leave to be taken to claim LTA as per law. Each Company is having their own rules but I need to understand how many days of leave is necessary to claim.
I have made travels for my LTA claim, and these travelling were not in single up and down mode, there was a journey break and continued through connecting other train and local taxi to complete my tour. These all travels were done during my LTA leave period, and I have all the bills for travel expenses (Trains and taxi), now suggest me wheather I can claim my entire travelling expenses as LTA claim or only single journey will be considered as non taxable and rest all travel exepenses are taxable. Please answer
1. If I have travelled in 20-Dec-13 & Return in 15-Jan-2014 , it would be considered in LTA block 2010-2013 or not,
2. If I planning to traveled in March 14 also can it would be considered for tax benefit or not (LTA block 2014-2017)
can i claimed both LTA.
Am getting approx Rs.35000/- every year as LTA allowance. Can I claim Rs.35000/- or Rs.70000/- in block of two years? Plz reply Mr at the earliest?
I have been on leave in January 2013. In which financial year can i claim the leave travel concession. whether f.y. 2012-2013 or f.y.2013-2014
As LTA claim is allowed only twice in a 4 year block, can the monies received as Leave travel allowance in remaining 2 years be included during the claims?
Example,
Employee A receives 12000 every year as LTA. He has not claimed for first 3 years, can he proceed to claim the 48000(accumulated sum for 4 years) of LTA on the 4th year.
Hi,
Should the place of origin of journey be the place of employment? Or origin of journey can be from anywhere in India and destination to anywhere in India?
in this article you write
“Proof of travel
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.”
Which is not correct as per Circular No. 8/2013 dated 10-10-2013 “Obligation of the employer –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.”
So don’t make confusions for everyone.
Sir
My self and my family traveled to tirupathi in the moth of May-13 due to non availability of Rail tickets i have traveled in AP State Road Transport can i eligible for LTA for road Transport for LTA
if I am going on 30 Dec 13 for ltc .can I avail tax exemption?
If the travel commenced in March (29th March -onward journey) and Ended in April (8th April -return journey) . Whether I am eligible to claim the whole amount in current financial year or I was suppose to claim onward journey during last financial year.
Hi,
I am working with an IT firm and got 4200 as LTA per month(taxable). I am about to claim my tickets of about Rs 10000 for tax benefit.
If it approves, will Rs 10000 will be subtracted from my annual taxable income or is there any percentage of reduction like HRA(40% of Basic+DA)?
I joined in the month of Sep-2013. My LTA per month is Rs 2000/-.
Request you to let me know that I am eligible for LTA.
My Employer is says that if I submit nor if I wont submit LTA proof they wont release my LTA as Taxable as my joining period is less than 6 months. They are telling that my LTA will be released in next year end 2014. Is this correct. Please advise.
I have not claimed any LTA exemption during the block of 2007-2010 but I claimed exemption during financial year 2010-11 (which shall be considered for last block as claim in immediate next year) & financial year 2012-2013. Does that mean I can claim 1 more time for current block of 2010-2013?
Hi,
I worked with my previous organization from May 2011- July12, and I haven’t claimed the LTA when I was working over there. And I have travelled in March 2012. I shifted to my current organization in Aug 2012. Please let me know if I can claim that amount in my current organization.
Can i claim LTA for Hyderabad to Goa to Delhi to Hyderabad trip?
I was on maternity leave (3 months paid leave) from March’13 to May’13, I extended my leave for two month (June’13 & July’13) for medical reasons, which is without pay (LEAVE WITHOUT PAY), now company is not paying my medical & LTA for these two months as I want on leave without pay. please advise am I eligible to claim LTA/Medical for 10 months or 12 months.
Please advise
Thanks
Sarika
Hi!
In case we have not utilized the LTA in 2010 and used it in 2011 for 2 consecutive years, will we get a tax exemption in LTA for the total amount utilized ( 10,000+10,000) and similarly we repeat the same thing in 2013 using it for 2 years together ( 10,000+10,000), do we again get a tax ememption in LTA in both the cases or get a tax ememption only ones i:e on 2 years LTA amount.
Thanx
hi,
i travelled from Bangalore-> Delhi -> meerut(UP) alone.
then from Meerut->Japiur->Meerut (with parents).
Meerut->Delhi->bangalore (alone)
can you please tell me what all fares of travel be included in my LTA
bangalore-delhi and forth are included trips by flight, while rest be private cabs
My company recently introduced a policy as follows, wanted to know if this is legally correct.
1. LTA can be claimed only if you gone on travel on 3 consecutive paid/earned leaves. So if I go on a leave on Fri to Monday with 2 days as weekends and 2 days of paid leave. As per policy I am not eligible to claim LTA for tax savings.
2. LTA can be claimed only on Earned Leave and not on any other leaves like Casual Leaves of Holidays.
Request your help to understand the same.
Hi,
I traveled with my family (Wife, parents) by hiring a vehicle from Rajasthan to Jammu & back to Rajasthan via few other places on the route. My place is not connected by rail or air.
Can I claim the LTA by submitting the Bill of Travel Agency for hiring car?
Please help.
What will happen if someone travel from a place that is not connected by rail & air.
How can I claim LTA of rent given for hiring vehicle to travel agent?
Thanks
Amit
I am going to travel from pune to Delhi. The tickets I booked is from mumbai to Jaipur and from pune to mumbai and jaipur to delhi i am taking Cab service. I will be coming in the direct flight from delhi to pune. My question is:
1) Can I claim LTA for the above journey?
2) Can I also claim for Taxi?
thanks
Hi,
I joined my organisation in july 2012 and i am entitled to claim LTA of 12000 per annum. My organisation has a rule that an employee cannot claim for LTA until he completes one service year. Now i am elegible to claim my LTA but company says that i can only submit the bills for journey onwards 1st Jan 2013 as its a income tax rule. I want to know that is there any such income tax rule? My company is based out in chennai.
Sir/Madam
What if I travel by my own vehicle ( CAR )? will it be applicable for LTA?
If yes, then what kind of documents I need to submit for that? is there any minimum and maximum limit for LTA?
Dear Sir,
We are having the following query with regard to LTA exemption:
1) As per rules, LTA is exempted 2 times in a block of 4 yrs. Can employees claim LTA by combining two yrs together i.e. 2 times in the block and claim exemption 2 times?
2) If iam eligible for 1st yr-Rs.30000/- & 2nd yr-Rs.35000/-, when i perform journey i spent Rs. 50000/-. What will be my LTA exemption? is it Rs. 35000/- or Rs. 65000/- (2 yrs) or Rs. 50000/- exemption & balance Rs. 15000/- taxable.
Is there any provision under IT Act to address these situations? Pls clarify?
Thanks,
Vijaya
dear sir
i have a query here .
My LTA claim for 2011, 2012 & 2013 is accumulated thru carry forward . i have made a trip in june,2013 . i want to use my entitlement of 2011 and 2012 towards my June,2013 trip to get tax exemption since my 1 journey is left out of this block of 2010-2013 . I would like to carry forward my LTA claim of 2013 to next block & will be claiming along with 2014 entitlement .
Can i do so ? kindly revert .
regds
i wantto know if a bank officergoesto europe on lfc whether it is taxable
Hi,
I travelled during September 2012 and submitted the bills for LTA in January 2013. Total cost of the journey was around Rs.34,000/- and the whole amount got approved for LTA. I got reimbursement of around Rs.15,000/- during February 2013 as my LTA eligibility was around Rs.15,000/- till end of March 2013. Am I eligible to get the remaining amount of around Rs.19,000/- during April 2013 as this is a new financial year.
As per the FAQ’s LTA is a calender year not financial year. Is there any eligibility criteria with respect to financial year.
Please advise.
Thanks in advance,
Bhaskar
Hi,
I travelled in 2011-12 but did not claim LTA at that point. My LTA at that point was taxed. Can I claim LTA in this financial year? Please reply.
I didn’t claim LTA exemption for last three FYs of current LTA block years. Although I have received the LTA amounts every year.
But I have availed the leave from 23rd March’13 to 08th April’13. And I will receive the LTA amount with April’13 salary. I have already received last year LTA amount in April’12.
Then for which FY / LTA block year, the exemption I should claim?
Please advise.
Dear Sir
I have not claimed my LTA for 3 years in the block of 2009-13. is it possible to claim entire LTA of 4years in current year as a single claim after producing necessary travel bills?
Pls clarify.
Regards
Vasudevan TM
9380541125
Pls guide if an employee Travelled from 23.12.2009 to 02.01.2010, for which block exemptino should be considered.
I have a case like for the forward journey i traveled with my family but in the return journey i came back alone. Can i claim LTA for the family for the forward journey? or only mine to and fro journey will be considered?
I had traveled from Kolkata to Gangtok and from Gantok to Lanchen, Gurudrongma, Lanchung, Yumthang and back to Gangtok and to Kolkata. As these places do not have a Rail or Public Transport System, can I claim Car Rental charges for exemption? If not how this tour will be considered for calculating tax exemption?
Sir,
In which FY can we claim the benefits of Income Tax exemption????
I am working in a PSU & my company provides income tax exemptions once in a block of two years. I have travelled in March-2012. Can i claim income tax exemptions for the block year 2010-11 in the current FY i.e. 2012-13.
Plz reply soon on my mail id.
Dear Sir,
In context of LTA, i want to know what do u mean by Air travell by ” National Carrier”? does it mean that travell performed by Air India or Indian Airlines?
Dear Sir,
In context of LTA, i want to know what do u mean by ” National Carrier”? does it mean that travell performed by Air India or Indian Airlines?
Hi,
I took my leave on 31 dec 2012 to 6 jan 2013. so this LTA comes under which year 2012 or 2013
I joined in an organisation on January. Can I claim LTA before my 6 months probation period is over?
In 2011 I joined job at XX company. At that time LTA allowable for me was 1300/pm ie 15600/-PA. In year 2012-2013 i received increment(?) letter showing decreased LTA 850/pm i.e 10200/-PA. I had not done any claim for any LTA from 2011 till todays date. If I will claim LTA now, how much amount will I get
15600+10200 or 10200+10200
Please help
If LTC involves foreign travel, then is it taxable even for SAARC countries like Nepal & Bhutan where visa and passport are not required?
Hi,
Is it necessary to be on annual leave from company to avail LTA? Can i claim LTA if i am on LOP for the period when i am claiming LTA
I have 3 questions.
1. Can i claim for LTA if i traveled on Saturday and came back on Sunday, and i did not use any on my company provided Leaves as both days are holidays for me.
2. I work in Bangalore, while I have planed my Travel from Kolkatta to Gangtok and from Gangtok to Bangalore back. Can I claim LTA for this travel? Does my travel has to start and end from one Place only?
3. I wish to travel from Kolkatta to Gangtok for which there is no Rail/Air connectivity. Can i claim the Taxi vouchers from the nearest Rail/Airport to Gangtok?
What is national carrier.. pls,.clarify and