Taxability of Leave Travel Allowance (LTA) under section 10(5) of Income Tax (IT) Act:
LTA is an allowance paid by the employer to its employees for travelling, may be alone or with family. Such amount paid by the employer is treated tax free. The exemption of tax and the details of conditions subject to tax exemption are ensured by rule 2B of section 10(5) of the IT Act, 1961. The section also includes rules related to exemption of tax.
Traveling employees are advised to keep proper proofs of their travel like tickets, boarding passes, travel agent invoices, duty passes or any other type of documentary proofs, etc, for any instance of demand by the employer or assessing officer.
Certain restrictions related to LTA are stated below:
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