Leave Travel Allowance (LTA) which not only gives an employee some
quality time to spend with his/her family, but also reduces the burden
of tax liability up to certain limits and conditions as explained below
in detail:
What is LTA/LTC?
LTC, i.e Leave Travel Concession, or LTA, i.e Leave Travel Allowance, is basically your employer’s reward for working hard and putting up long hours at work. Your employer grants you leave to spend quality time with or without family while bearing all your and your family’s travel expenses. And the best part of it is that LTA helps you save tax.
“LTA tax exemption, in fact, is covered under section 10(5) of the Income Tax Act. Under this exemption, an employer reimburses the travel expenses of an employee and his family to any place in India twice in a block of four calendar years. The current block for you is 2018-21. However, any other expense such as food, shopping, lodging etc. is not included under this,” says CA Abhishek Soni, Founder, tax2win.in.
Who is considered as family for claiming LTA/LTC?
In India, we consider and treat everyone as a part of our family. So, in order to avoid a person from taking undue advantage of the word ‘family’ for the purpose of tax saving, the Income Tax Department has described the word ‘family’. For the purpose of claiming LTA, family means:
# Your Spouse & children (2 children)
# Dependent Parents
# Dependent brothers and sisters
What is the amount of exemption available under LTA?
You can’t just go and buy the most expensive ticket. Travel fares are exempt as per the following conditions subject to the amount actually incurred by you. However, the amount incurred should not exceed the one specified in your CTC:
How to claim LTA for the purpose of tax saving?
It’s simple, all you need to do is fill in the details at the time of income tax proof declaration (in Form 12BB) and submit the proof of your travel like the boarding pass, rail tickets, travel agent’s invoice, etc to your employer. Your employer will consider it while deducting TDS of the subsequent months.
However, “it is to be noted that many employers do not provide for LTA/LTC in the salary structure of the employee. So don’t forget to check with your employer before you plan to claim LTA/LTC,” says Soni.
Things to be noted when claiming LTA:
# Exemption is allowed only on actual travel cost.
# Mode of travel should be air, rail or any other public mode of transport.
# It is allowed for domestic travels and not for international travels.
# The tax exemption can be claimed twice in a block of 4 years. The current block is 1st Jan 2018 to 31st Dec 2021.
# Block year is the calendar year not financial year.
# The restriction for claiming LTA is applicable on two children.
What will happen for those who have 4 children?
The applicability of restriction of two children, in such cases, is different. When after having one child, you have more than 1 child (twins, triplets, quadruplets, etc.) on the second occasion, then they are considered as one child for the purpose of LTA. Thus, you can claim the travel expenses for them.
What to do when you forget to claim LTA in the previous block of 2014-2017?
The government allows you carry forward your unclaimed LTA to the first year of the next block. This means, if you have claimed only 1 LTA or didn’t claim any LTA in the previous block of 4 years, you can carry forward and utilise the LTA for only 1 journey (i.e., only 1 LTA can be carry forward) and claim it 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), it will lapse,”
What is LTA/LTC?
LTC, i.e Leave Travel Concession, or LTA, i.e Leave Travel Allowance, is basically your employer’s reward for working hard and putting up long hours at work. Your employer grants you leave to spend quality time with or without family while bearing all your and your family’s travel expenses. And the best part of it is that LTA helps you save tax.
“LTA tax exemption, in fact, is covered under section 10(5) of the Income Tax Act. Under this exemption, an employer reimburses the travel expenses of an employee and his family to any place in India twice in a block of four calendar years. The current block for you is 2018-21. However, any other expense such as food, shopping, lodging etc. is not included under this,” says CA Abhishek Soni, Founder, tax2win.in.
Who is considered as family for claiming LTA/LTC?
In India, we consider and treat everyone as a part of our family. So, in order to avoid a person from taking undue advantage of the word ‘family’ for the purpose of tax saving, the Income Tax Department has described the word ‘family’. For the purpose of claiming LTA, family means:
# Your Spouse & children (2 children)
# Dependent Parents
# Dependent brothers and sisters
What is the amount of exemption available under LTA?
You can’t just go and buy the most expensive ticket. Travel fares are exempt as per the following conditions subject to the amount actually incurred by you. However, the amount incurred should not exceed the one specified in your CTC:
| Journey Mode | Amount of Tax Exemption |
| Air | Price of economy class ticket for the shortest route or the amount actually spent on airfare, whichever is lower in amount. In case the places are connected by rail, then 1st Class AC rail fare by the shortest route. |
| Train | First class ticket for the shortest route or the amount actually spent on train fare, whichever is lower. |
| Any Other Mode | If the places are not connected by rail and
|
It’s simple, all you need to do is fill in the details at the time of income tax proof declaration (in Form 12BB) and submit the proof of your travel like the boarding pass, rail tickets, travel agent’s invoice, etc to your employer. Your employer will consider it while deducting TDS of the subsequent months.
However, “it is to be noted that many employers do not provide for LTA/LTC in the salary structure of the employee. So don’t forget to check with your employer before you plan to claim LTA/LTC,” says Soni.
Things to be noted when claiming LTA:
# Exemption is allowed only on actual travel cost.
# Mode of travel should be air, rail or any other public mode of transport.
# It is allowed for domestic travels and not for international travels.
# The tax exemption can be claimed twice in a block of 4 years. The current block is 1st Jan 2018 to 31st Dec 2021.
# Block year is the calendar year not financial year.
# The restriction for claiming LTA is applicable on two children.
What will happen for those who have 4 children?
The applicability of restriction of two children, in such cases, is different. When after having one child, you have more than 1 child (twins, triplets, quadruplets, etc.) on the second occasion, then they are considered as one child for the purpose of LTA. Thus, you can claim the travel expenses for them.
What to do when you forget to claim LTA in the previous block of 2014-2017?
The government allows you carry forward your unclaimed LTA to the first year of the next block. This means, if you have claimed only 1 LTA or didn’t claim any LTA in the previous block of 4 years, you can carry forward and utilise the LTA for only 1 journey (i.e., only 1 LTA can be carry forward) and claim it 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), it will lapse,”
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