Leave Travel Allowance or LTA, also known as Leave Travel Concession, is a salary benefit that employers offer to employees covering their travelling expenses (up to a limit) when they are on leave from work. The Income Tax Act, 1961 provides a deduction against the LTA received and claimed by the employee under the old tax regime.
The following conditions must be met to receive a leave travel allowance and get tax exemption for it:
Let us say that your employer offers ₹40,000 as LTA, which is a part of your CTC. You go on a domestic vacation with your family. Let us assume your flight tickets cost you ₹30,000 and other expenses amounted to ₹5,000. While claiming your LTA, you are only eligible to get an allowance of ₹30,000 (spent on travelling via flight). The ₹5,000 spent on accommodation, food, and other items is not included in LTA.
Deducting your LTA claim from your LTA eligibility of ₹40,000, the remaining ₹10,000 will be taxable as your earned income, as per the income tax slab applicable to you. Of course, this is under the old tax regime. Should you choose the new tax regime when filing your income tax, there is no provision for LTA exemptions at all.
Each employer may have a different procedure that their employees need to follow to claim an LTA tax exemption. Typically, the employer announces a due date and a specified time period during which you can fill out the necessary forms and attach your travel proofs.
While not all employers may ask for proof when claiming, it may be the best practice to save the tickets for future verification.
The amount of exemption is limited to the economy fare of the national carrier (Air India) for the shortest route between the two places. If the actual amount spent on travel is lower, then that will be considered.
Fare of the first class AC ticket for the shortest route to the destination, or the actual amount spent, whichever is less will be considered while calculating the exemption amount.
|Situation||Amount of exemption|
|Place of origin of the journey and the destination are not connected by any recognised public transport.||It will be assumed that the journey has been made via rail. The first class (air conditioned) fare of the shortest route between the two places will be exempt.|
|Place of origin of the journey and the destination are not connected by railway but are connected via other recognised public transport.||The deluxe or first class fare applicable to the shortest route of the available recognised transportation system, or the actual expenses, whichever is less.|
To claim LTA, all you need to do is fill out the LTA form furnished by your employer and attach the proof of travel along with it. There are no specific documents that are mandatorily required to claim LTA exemption. However, it is best if you keep proof of your travel in case the tax authorities demand them in the future. Proof of travel includes your travel tickets, be it flight booking receipts, train tickets, bus tickets, or a receipt received while booking your travel using any other mode.
Leave travel concession comes with the following benefits:
LTA is a component of the salary structure and is a benefit offered by your employer as a part of your CTC.
You can claim your actual cost of travel and save on your expenses on a trip.
Since LTA forms a part of your CTC, it comes under the salaries head while calculating your income tax liability. A deduction is available for LTA under section 10(5) of the Income Tax Act under the old tax regime.
Even though the benefit is offered by your employer, it extends to your family as well. It is applicable whether you travelled alone or with them.
Below is a list of restrictions that must be kept in mind while claiming a leave travel allowance exemption:
A block year is a set of 4 years. This was decided by the government to allow for flexibility in travel and extend tax benefit to the employee when calculating leave travel allowance exemption. The block year system was established in 1986, when the first block year was announced as 1986-1989.
The current block year is 2022-2025. Interesting fact: the previous block year was supposed to have been 2018-2021. However, due to suspension of travel during the pandemic, this block year was extended and made applicable till 31st December 2022, by virtue of rule 10 of the CCS(LTC) Rules.
If you have not claimed any LTA or have claimed it just once in the last running block period, you can claim an additional LTA exemption during the current block year. This implies that in the current year, you can avail this allowance thrice. However, the first of the three claims must be made within the first year of the block year. For instance, if the block year is 2022-2025 during which you wish to claim 3 LTA exemptions, the first claim must be made in 2022.
Leave Travel Allowance is a benefit offered by employers to compensate for travel of the employee and close family when on leave. You can claim an LTA exemption, offered under section 10(3) of the Income Tax Act, while filing your tax return using the old tax regime. The new tax regime, however, does not have a provision for LTA.
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|Section 112A||Section 50||Section 245|
|Section 80QQB||Section 32AD||Section 250|
|Section 35D||Section 143 (1a)||Section 115BAB|
|Section 143||Section 79||Section 140A|
|Section 17(2)||Section 3||Section 94A|
|Section 147||Section 80||Section 40A|
|Section 48||Section 115AD||Section 14A|
|Section 45||Section 285BA||Section 6|
|Section 36||Section 87A||Section 80GGA|
|Section 244A||Section 234E||Section 28|
|Section 197||Sectio 548||Section 194J(1)(ba)|
|Section 145A||Section 80P||Section 92CD|
No, you can not claim LTA if you have not travelled. LTA forms a part of your salary. If not claimed, the entire amount is taxable as per your income tax slab. You may need to attach proof of travel to claim the LTA exemption.
You can claim an LTA exemption twice in a block year. A block year comprises of 4 years.
The current block year is from 2022-2025. The previous block year was from 2018-2021. However, this was extended till 31st December 2022 in view of the travel restrictions during the coronavirus pandemic.
Proof of travel for claiming LTA can be your air tickets, boarding pass, booking proof sent by a travel agent, etc. Anything that shows your travel bookings can be submitted.
No. Hotel stay is not included under LTA. Only your commuting expenses are counted. No other expenses, including those on food, shopping, etc. come under leave travel allowance.
No. The government has excluded leave travel allowance under the new tax regime announced in Budget 2020. It is currently optional to choose this regime. LTA exemption continues to be available under the old tax regime.
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