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Tax Exemptions for Leave Travel Allowance (LTA)

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Tax Exemptions for Leave Travel Allowance (LTA). This article specifically talks about the exemption which is provided to the employees for the leave travel allowance they get from the employer for being on leave and travelling for the official work. Leave travel allowance is allowed only if employee claims leave and goes on a vacation and only if submits the actual bills of the journey. However the same is not required for income tax purpose, but it is always safer side to keep handy the original bills. Now check more details regarding “Tax Exemptions for Leave Travel Allowance (LTA)” from below….

Tax Exemptions for Leave Travel Allowance (LTA)

Tax Exemptions for Leave Travel Allowance (LTA)

Explanation:

The Leave Travel Allowance is allowed only if the allowance is received for the domestic travel in India. The International journeys would not be covered under this allowance, i.e. they can claim allowance only if:

  1. Allowance received for place in India
  2. For any place in India after retirement or termination of services.

Now the question comes that how many times the LTA can be claimed. The answer to it is assessee can claim the exemption any 2 journeys in a block of 4 years. Block for LTA would be always 4 years and the allowance is allowed for any 2 journeys, i.e. assessee can claim allowance received for any two journeys whichever the assessee likes to choose.

Must Read – What is rebate under section 87A and who can claim it?

Now the another question comes that can the journeys left unclaimed during the block of 4 years can be carried forward to the next block. The answer to it is that the unclaimed journey can be claimed but not to the next block but for the next year from the year of completion of the block in which the journey remained unclaimed. Please note that the words here are “NEXT YEAR” and not “NEXT BLOCK”.

Whenever the LTA is received in cash and the journey for the LTA is received is not conducted than no exemption would be provided for the same. The only condition for claiming the exemption is that the journey should be actually performed.

Here the exemption is provided for the journey conducted by the employee only or employee with his family. Here word family includes spouse and two children of the employee. Here important thing to note is that the journey should be performed by employee only or employee with his family. If the employee is not present in the journey than the journey is not allowed as exemption.

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The most important thing comes now is that the exemption is granted only for the “TRAVELLING FEES” and not for any other services like boarding & lodging, tea and snacks, etc.

How to calculate LTA ??

There may be cases to calculate LTA, they are

  1. When journey is performed by Air – Exemption upto the Economy class fares of Airlines can be allowed as exemption.
  1. When journey is performed by Rail – Exemption upto fare equivalent to the Air conditioned First class Rail ticket. But here the actual journey preferences should be considered, i.e. if the journey is done by way of normal sleeping coach then the journey can be exempted only upto the fares of the actual fares paid for the sleeping coach and not the AC coach Ticket fare.
  2. Any other vehicle – Exempted only upto the fare equivalent to the 1st class or deluxe class ticket of such mode of transport for the shortest mode of route possible for reaching the destination.

Must Read – Section 43B Deductions Based Actual Payments

If you have any query regarding “Tax Exemptions for Leave Travel Allowance (LTA)” then please tell us via below comment box…

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About Yash Shah

Yash Shah is passionate article writer and has written more than 100 articles in the field of Finance, Insurance, Stock Market, Company Law, Auditing, Taxation and many others. In case of any queries or suggestions, you can reach the author @ [email protected], you can also catch him on facebook @ yashshah299

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