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
you can still claim at while
filing your return provided you have actually incurred the expenses. You
will have to produce the documents in case you case is selected for
detailed scrutiny.
The maximum amount of LTA which you can claim is lower of the amount of LTA given by your employer or money spent by you on such travel.
Local Traveling doesn’t qualify for LTA.
If you still have any tax related queries and need tax saving tips you can call /whatsapp us : 9052535440.write us : dsssvtax@gmail.com
The maximum amount of LTA which you can claim is lower of the amount of LTA given by your employer or money spent by you on such travel..some companies give 1 month basic salary under LTA, some uses 1-10% of CTC and some companies provide a cap of 75000/- or 100000(depend on the CTC of an employee).If you still have any tax related queries and need tax saving tips you can call /whatsapp us : 9052535440.write us : dsssvtax@gmail.com
I have not allotted LTA in last financial year. But I have made a travel in last financial year. How to claim that
Hello , good evening to u… I haven’t clime the LTA for last year …and also for this year also .. so will i tax exemption on it if am not claiming continues year..
I availed leave from 28/03/2016 to 02/04/2016.Whether I am eligible to claim LTA for the financial year 2015-2016 or not. Pls advice
If your family travels without you, no LTA
can be claimed. You have to make the trip, either by yourself or, if
claiming for your family, you should travel with them.
If you still have any tax related queries and need tax saving tips you can call /whatsapp us : 9052535440.write us : dsssvtax@gmail.com
Can i submit only Agent Invoice as a proof instead of tickets to claim the LTA. please advice.
I travelled using car & claimed LTA, however they have considered railway fare for exempting tax & not the actual car fare I submitted. Is it correct?
if I am taking taxable LTA, how is it calculated..i mean if i am getting rs. 20000 per ann actual what will be teh amount after tax deduction
Hi, as I understood that LTA claimed in the manner discussed above in a 4 years block will help the employee to save tax on the amount claimed. But, can an employee claim the LTA for the previous years ( say 2011, 2012, 2013) now which is still unclaimed and not released by the employer even on the ending of the previous block ie 2010-13 ? Will the amount be taxable on release? Who should pay the tax – employee or employer on behalf of the employee ( TDS ) ? Please confirm.
As per LTA exemption; 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 – Here my doubt is the whole amount exempted? For more clarity airfare is inclusive of base fare, airline fuel charge and others like User development fee, Passenger service fee, Development fee and service tax on the above. Please clarify
You can claim LTA only once a year, for a single journey
If I am taking taxable LTA and not travelling to any where, is it mandatory to take leaves. As far as I understand, leave is mandatory only when you are planning to travel and take it as Non-Taxable
Answers as below:
1. Yes
2. No
3. No. Boarding passes are required
4. Only round trip journey cost will be refunded. You can not claim for the flight which you missed but you can use the separate return flight ticket.
Yes. You can not claim in the same year twice, however you can claim two times in a block of four years.
Is LTA allowed post retirement..?
Hi Tax guru,
Recently i been to trip (group trip in bus) which covers 8 places (i.e. Bangalore-Mysore-Wayanad,…, Bangalore) which costs upto Rs. 32022. Please could you confirm, Am i eligible to claim whole amount 32K? or does it cover only one source and destination?
Thanks
Vinay
Once my employer has approved only 38350, saying this is the max will be provided for a forest journey as per the act. Is it so. Then pls tell me the act details.
Hi , I have claimed LTA taxable and then traveled later on. Can i get the tax rebate during efiling of return ?
Yes, you can claim both,condition is that journey should be by the shortest route possible. Your case has no issues.
no.
this is as per your salary structure/paid by Company and actual amount spent on ravel.
Only urs can be claimed in that case.
Hi,
LTA exemption rules refer to calendar year therefore I am having following query:
In case I have taken LTA advance in Feb’ 15 however I have traveled during Nov’ 15. Since both LTA advance & Travel against LTA advance falls in same calendar year therefore I should be eligible for LTA exemption for FY 2015-16. Please advise
Hi
Hi,
I have travelled via flight of indogo from Kolkata to Jaipur and returned via flight from Delhi to Kolkata from Jaipur to delhi i came via train. can i claim both the train and flight journey from kolkata to Jaipur and return?
My travel started in December 21st 2015 and ended in Jan 5th, 2016.
Can i claim my entire Travel expense as LTA for 2016.
“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.”
How is this practically possible, cos if I do not claim LTA in the first year my employer would add the same to taxable income and deduct TDS and I also would have filed my ITR showing that as income.
Does it mean I have to first file a revised return for the previous year and then claim it as exempted income in the current year.
HI
CAN WE CLAIM LTA CONSECUTIVELY FOR 2 YEARS INSTEAD OF ALTERNATE YEAR.
CAN ANYONE CAN SUGGEST ME…
THANKS & REGARDS
Respected sir,
I would like to know, whether a staff can procure 3 LTA’s in one financial year?
To elaborate, I myself taken 2 LTA’s in the month of June15 for the year 2012-13,
2013-14 and my date of joining is 01.12.1992
Yesterday, I just completed 23 years therefore would like to know, whether I am entitle for the third in January16 as I am planning to quit the present job.
I shall be highly obliged if you could enlighten me with the same.
Awaiting for your earliest response.
Many thanks,
With warm regards,
Mehernosh R. Writer.
Dear Sir,
I need your help for LTA rule .As you are aware that due to heavy expenses in Leave travel and which is not sufficient for full family.Shall I used this LTA amount for my only son travel,who wants tyo travle with his friend to Adaman.Where I may not be able to travel due to heavy expenses .Can alone my son used full LTA and I woudl get teh exemption for this amount? If yes ,shall I request you to please confirm with LTA rule section and by section please.I woudla ppreciate your reply per return by mail if possible,As my employer refuse to give me and exemption.Insuch case what I should do? Thanks and best regards, Ghanshyam Sarode
Hello Sir,
Really nice information on LTA. I have following doubt.
I have traveled From Mumbai to Srinagar by Air and My parents traveled from Ahmedabad to Srinagar by Air.
In this case can I get the LTA benefit for my parents also.
Hi Sir,
I forgot to claim LTA previous year (I travelled in April 2014), as I lost the tickets. Now I got the tickets, can I claim this in 2015? If yes what is the process?
Thanks,
Praveen Singh
Dear sir,
i have left company 10 month works. not paid to company lta. company said you are not working continues 12 month after aligible to lTA.
Please replay .
mahipat
Hi Sir
I have few qustions, Can you please let me know below –
1. I did not claim LTA exemption in 2010 to 2013 cycle. I have read that it gets carry forwarded and I can claim tax exemption on 3 LTA’s in 2014 to 2017 block(carry forwarded LTA exemption will be available for the 1st year of next block). Is this correct?
2. I want to claim 2 LTA exemptions for this year(14-15) Tax return. I have taken 2 trips in 2014-15 financial year. Also i did not claim any LTA in 2010-13 cycle. Will it be possible to claim 2 LTA exemptions in one financial year.
3. Will the e-tickets of the travel suffice or a boarding pass is required for Air Travel as a proof.
4. I have booked a round trip to Delhi(by air) and missed the return flight. Hence booked a separate flight while returning. Will the complete amount i.e. Round Trip(including missed flight) and the return flight will come under LTA exemption? I did not get any money refunded for the missed flight and I am unable to calculate the cost of 1 side air fare since its clubbed in my ticket itenary.
A quick response will be highly appreciated.
Regards,
Mohit
Will LTA & Medical will be part of ESI or not
Dear Sir, I have recently let a company. In my CTC LTA is mentioned and when my settlement came LTA was not paid to me.They say as per company [policy i am eligible to claim LTA only if i complete 1 year.I have worked only 10 months. Can i still claim LTA. Please help me in this regard
I received Rs. 41905 as LTA in F.Y 2013-14. In F.Y 2014-15, i switched my Job to a new company and i received Rs. 5548 as LTA from new company for F.Y 2014-15. I have bills of Fare of Rs. 40000 for the F.y 2014-15. How much LTA can i claim for F.Y 2014-15 and can i claim LTA received in F.Y 2013-14?
I received LTA in F.Y 2013-14 of Rs. 41905. In F.Y 2014-15, i switched job to a new company and i received Rs. 5548 as LTA from new company . I have bills of fare for Rs. 40000 for the F.Y 2014-15. So how much can i claim as LTA for F.Y 2014-15 and can i claim against the amount which i received in from previous company?
If a person who is entitled to avail LTC as per entitlement he is entitled to get notional fare i.e.economy class and within this fare he travelled two places and the amount incurred under notional fare. but the employer had reimbursed only one place to & fro fare. In this situation whether employee can claim the balance amount incurred by him by deducting the expenses from salary head (actual expenses not reimbursed by the employer)
Hi
I have received LTA from my company in Jan’15. and I got in Jan salary i.e. on 01-Feb-15.Now my company deducted tax as I have not travelled since yet.I have plan to travel in Oct-15 and I wants my tax to be reimbursed which deducted during F.Y.-14-15 or F.Y. 15-16.
Also inform you that in current year i.e. F.Y. 2015-16 i am not liable to tax before claim LTA. So can you tell me how can i get benefit LTA in F.Y. 2015-16.
Note:-LTA is a part of CTC.
Hi,
For example I’m working since 2010, I’ve mot claimed any LTA since 2010 and now during 2015 I’ve travelled and claiming the LTA ,please confirm,this will pertains to last block,year 2010-2013 or current block 2014-2017.
thanks
Sir,
It was a useful write-up.Thanks.Now I want some clarifications regarding the travel fare.To SRINAGAR since there is no rail service we had to avail the flight service only.So I travelled by a private airline from DELHI to SRINAGAR. How much is the amount I can claim for IT relief.
Secondly are the travel expences incurred for local travelling qualify for the concession.
please clarify.
Hi
I Lost my Job in Nov 2014. But went to some places in india with my family after the job.
I have not availed LTA exemption in last 4 financial years.
the employer deducted the applicable tax on the LTA amount paid to me in my full 7 final settelment.
Now at the time of filling of return, can i avail the LTA exemption for the year 2014-15.
Pls guide..!
Regards
Ravi Verma
Hi,
My Family travel from 30th May 2015 till 7th June 2015, where as I took leave from 3rd June till 7th June and I travel on 3rd June and return back on 7th June.
Will I am eligible for tax exception for Myself and for my family??
1.In return also I travel through AC 1st and My Family travel through AC 2nd. Still I am eligible for Tax exemption for return Journey for Myself and my family??
2. For onward Journey I am eligible for Myself expanse only??
reply
I want to claim LTA for 2 years for finical year 2014-2015 & 2015& 2016 I have traveled in June 2015 can I claim advance LTA also from June 15 to March 16 from the Bill submitted on travel done on June 15
or I will take claim up to June 15 only remaining will be tax able or it will be paid monthly by my employer without deducting tax .
Nice Information
I want to ask whether the service tax amount is allowable for LTA exemption?
I want to ask whether the amount of service tax is allowable for LTA?