Leave Travel Allowance (LTA) Exemption under Income tax Act

Leave travel allowance or LTA is an allowance received by an employee from his employer to travel any likable place according to his choice. LTA can be obtained every year from the employer but the exemption can be claimed two times in a block of 4 years. The recent block of 2010-2013 for leave travel allowance will be over on 31st December 2013.

If for any reason you are not able to claim the benefit of LTA exemption in a block of four years then you can carry forward and claim one journey in the first year of the next block of calendar years. Suppose you are not able to claim both or one journey as LTA exemption for the block starting from 1st January 2010 to 31st December 2013 then you can carry forward one journey and travel during the first year of the block starting from 1st January 2014 to 31st December 2017 to claim the exemption.Leave Travel Allowance (LTA) Exemption under Income tax Act

LTA can be claimed only for the fare amount you spent on your travel. Any other amount like boarding or lodging or taxi expenses related to your travel can not be claimed as LTA. While claiming LTA you need to produce the ticket or bills related to your fair amount you incurred for your travel. 

Only travel related to places in India can be claimed as exemption under leave travel allowance. If you have traveled outside India then exemption for LTA can not be claimed under income tax act.

Who can accompany the employee

To claim LTA following family members of the employee can travel along with him;

  1. Spouse
  2. Children
  3. Dependent parents
  4. Dependent brothers and sisters

The fare amount related to the above person can only be claimed as exemption. If the employee wants then they can accompany any one along with them but exemption for that portion will not be allowed even though the amount is reimbursed by the employer.

LTA can only be claimed for 2 surviving children if they are born on or after 1st October 1998. Children born out of multiple births after the first child will be considered as one child for the purpose of claiming exemption on LTA. But if your children are born before 1st of October 1998 then this restriction of 2 children will not be applicable and all of your surviving children will be eligible for the benefit.

How fare amount is derived

As we discussed above, journey can be performed to any place in INDIA to claim the benefit of leave travel allowance (LTA) exemption. But following points to be considered before claiming the fare amount as exemption;

LTA for air fareAir Travel

If you traveled by air then the amount of economy class air fare of the national carrier by the shortest route or the amount spent which ever is less will be the exempted amount for the purpose of leave travel allowance.

Rail Travel

If you traveled by rail then the air conditioned first class rail fare by the shortest route or amount spent which ever is less will be your leave travel allowance exemption.LTA for rail fare

Where the journey is performed by any other mode but the place or origin and destination are connected by rail then the exemption for the purpose of leave travel allowance will be the least of the amount you spent or the first class air conditioned air fare by the shortest route.

No rail connection

Where the place of your journey is not connected by rail the exemption will be calculated as follows;

  • If a recognized public transport exists to the destination then first class or deluxe fare by the shortest route or the amount spent which ever is less will be exempted as leave travel allowance.
  • Where no such recognized public transport exists then least of the amount you spent or first class air conditioned rail fare by the shortest route will be allowed as exemption.

How to claim LTA exemption

At then end of your travel, you need to submit your travel fare bills to the employer with a self declaration that you performed the journey. Based on the details, your employer will be calculating the taxable amount of leave travel allowance and deduct income tax on your salary. To be on safer side you need to keep a photo copy of your bills in case it is required in future to present before the assessing officer or your employer.

Other relevant points for claiming LTA Exemption

  • To claim this benefit the employee must be on leave
  • LTA exemption is based on actual expenditure you incurred. You can not claim exemption with out performing the travel.
  • It is not the obligation of an employer to check whether the employee has really performed the travel to claim LTA.
  • If both husband and wife are eligible for LTA then both can claim according to the provisions discussed above but it can not be claimed for the same journey.

There is no restriction on the amount of LTA you claim. If your service rule allows you to claim LTA up to the amount you are claiming then you can go ahead and claim that but for income tax purpose only the fare amount as we discussed above will be exempted. If you are planning to visit abroad then please have it in mind that you can not claim leave travel allowance (LTA) exemption for that travel.

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