Leave Travel Allowance (LTA)

Leave Travel Allowance (LTA) is an allowance paid by an employer to employees for travel within India, alone or with family. As understood, the allowance is only for travel expenses incurred. Thus, any overhead expense such as that for shopping, stay, food, etc, are not covered under this head. The LTA is tax exempted and its taxability falls under the Section 10(5) of the Income Tax Act, 1961 with Rule 2B.

  • The tax benefit is applicable only for the employee, and for two travels in a block of 4 years.
  • In case, you do not avail the exemption in the current block, then you can carry the benefit over to the next block.
  • The LTA tax exemption is extended to only two children of the employee. The children should have been born after 1 October, 1998.

In this post, we will discuss about list of exempted expenses from LTA, how to claim leave travel allowance, proof for travel,

List of Expenses Exempted Under LTA

Here is the required list:

  • Air Travel: The economic air fare by the shortest possible route or the amount expended is exempted, subject to whichever is the lowest.
  • Travel by Rail: A.C First Class fare by the shortest possible route or the amount expended is exempted, subject to whichever is the lowest.
  • Place of origin and destination spot of journey are connected by rail. However, the journey is undertaken by other transportation mode.
  • Place of origin and destination spot are not connected fully or partially by rail. But the same is connected through other recognized transport system (public).
  • Place of origin and destination not connected partially or fully by rail, and not connected through any recognized transport system (public).

How to Claim LTA?

When preparing the salary structure, Leave Travel Allowance is not a mandatory particular. But, if you are claiming LTA, then check for its presence in the pay structure.

  • The amount provided as allowance depends on the employer, and it may vary from an employee to another depending on the eligibility for this fund.
  • You may have to submit proof of tickets and bills to the employer to settle the claim.
  • The employer may let you know about when to raise the LTA claim and submit required proofs to the HR or the Accounts Department.
  • Usually, you are required to make the claim before the company calculates your tax liability.

Leave Travel Allowance Rules and Restrictions

Here are the limitations to the LTA:

  • You can avail the cost cover only for domestic travel in India and not international travel.
  • You can claim the expense for only travel and no other expenditures during the same.
  • You must keep the travel proof (tickets, bills, etc) to submit to the company for tax calculations or tax auditing reason.
  • The mode of travel allowed to avail the allowance is air, railway, or other modes of public transport.
  • You can claim LTA only two times in a block of four years.
  • If you do not claim the allowance in a particular block, the benefit of the same can be carried to the next block. But the exemption benefit or LTA must be used in the first year of the next block.
  • The leave travel allowance benefit is for the employee and his/her immediate family such as the spouse, children, dependent parents, and siblings.
  • The exemption is not available to more than 2 children that too they must be born after 1 October 1998. Children born before 1 October 1998 face no such restrictions. If more than one child is born in the second occasion of childbirth, then too this restriction does not make a difference.

Eligibility for LTA

It purely depends on the employer as to which employee he/she will provide the Leave Travel Allowance.

  • As an employee, your eligibility to get LTA depends on the pay-scale, position in company, other factors, and will of the employer.
  • To avail the allowance, you must take a leave and travel within India. It could be a one-way or round trip alone or with family members.

The LTA benefit is not entitled to all the employees, based on various factors such as grade, pay-scale, etc. an employer decides whether a certain amount can be allocated for LTA. In order to be eligible for the LTA, the employee should take leave and travel, the LTA is provided for travel within India where it is a round-trip with or without family members.

Documents to Claim Leave Travel Allowance

Here are the required documents:

  • To raise a claim to the employer/IT department, you must submit the LTA form and the travel proof/bill.
  • The employer and Income Tax Department do not have to verify the bills/tickets, but it is best to keep the boarding pass/tickets/other documents that can help you justify the LTA claim.

Leave Travel Allowance Calculation

From the above-given information, it is clear that the LTA deduction is for the shortest route between the origin and destination spot, and back. For instance, if you are eligible for Rs. 20,000 LTA, but have claimed only Rs. 10,000, then the LTA deduction will be of Rs. 10,000 only. The rest of Rs. 10,000 will be credited with your income, and shall the liable to applicable taxes.

  • You can avail Leave Travel Allowance for 2 journeys in a block of 4 years. The block years are decided by the Income Tax Department.
  • If you do not make a claim as per the given condition, then the exemption is moved to the following year, and not to the next block.
  • For exemption, only the ticket or travel fare is taken for exemption, and not any other expense.

NOTE: When raising a claim to tax authorities for LTA exemption, you do not have to submit proof of travel. However, you can always ask for the travel proof from your employer for safety. The proof of travel may include flight tickets, duty pass, boarding pass, etc. The employer may certify the domestic LTA claim and add it to form 16.

Frequently Asked Question about Leave Travel Allowance

Here are the LTA FAQs:

Several companies follow the provision of Income Tax Act strictly, and allow you to claim LTA only if the travel is undertaken in the period of the approved leave duration. If the travel is done on official holidays or weekends, then the organization may not accept the Leave Travel Allowance claim.

As per the Income Tax provision, you can avail LTA for travel cost for anywhere in India when on a leave. The mode of transport could be air, rail, or a public transport from the place of origin to destination on the shortest route. In case you have to travel different parts of India in a single vacation, then exemption is valid only for the travel cost from the origin spot to the farthest travel spot in vacation that too on the shortest route.

You can avail LTA exemption for only one trip in a financial/calendar year.

If you do not avail the exemption on LTA for one or two journeys in a given block of 4 years, then you can carryover the exemption in the next block. But, to claim the benefit, you have to complete the travel in the first calendar year of the block, after the succeeding block.

The exemption for Leave Travel Allowance purely depends on the LTA particulars in the compensation package. Thus, you can claim up to the LTA amount you are eligible in your package particulars after furnishing the travel proofs.