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Leave Travel Allowance - LTA: Eligibility, rules, documents you need to submit, how much amount you can claim etc.



Salaried taxpayers who have opted for the old tax regime should be aware of the exemptions and deductions they can claim to lower their tax outgo. Leave Travel Allowance (LTA) is one such exemption. Salaried taxpayers can claim LTA if it is a part of their salary or cost-to-company (CTC) structure.


However, there are some restrictions and limitations to claim LTA and a taxpayer needs to understand these intricacies to get its full benefits. This article explains how you can claim the benefits under LTA, the documents you need to submit and the travels that are eligible for LTA?

 

What is Leave Travel Allowance or LTA?


Leave Travel Allowance or LTA, typically a component of your salary, covers the expenses of your travel during vacation. Travel related costs incurred for family members who travel with the employee concerned is also allowed as exemption. LTA does not cover expenses on accommodation or food incurred during the trip.

To claim LTA, the employee typically needs to submit documentary evidence of the travel expenditure to the employers within specified deadlines.


LTA eligibility rules explained: Who can claim LTA?


Any employee whose employer offers LTA benefit as a part of the compensation package may claim a deduction for LTA.

Keep in mind that even if you qualify for LTA, you have to travel and submit the original proof of your journey to your employer to make a claim. You cannot claim this exemption if you have not travelled during your leave.

  • Available for Salaried employees.

  • Travel Allowance must be given as a separate allowance by employer.

  • Travel Expense must be incurred.


What are the conditions you need to keep in mind while claiming LTA?


There are certain conditions you need to keep in mind while claiming LTA. We have summarised a checklist here to understand the rules and requirements for claiming LTA:


  1. A taxpayer can claim LTA for himself or his immediate family for a journey during his leave. Family for this purpose means spouses and children (up to two if born on or after October 1, 1998). Parents, brothers or sisters of the individual who are fully dependent on the individual can also be considered as family.

  2. LTA exemption is allowed only for travel within the country. Overseas trips are not covered.

  3. Individuals are entitled to claim LTA exemptions for a maximum of two journeys within a block of four calendar years. The current block period is January 1, 2022, to December 31, 2025.

  4. If an employee has not availed LTA during a block of four years, he or she can avail the same in the first year of the next block.

  5. LTA is available for the shortest route from the place of origin to the place of destination. Further, there are defined rules for the travel routes and the class of tickets for exemption.

  6. Other expenditures like hotel, food and stay cannot be claimed under LTA. Airport transfers, like travel from airport to hotel and vice versa, are not allowed.

  7. Exemption for travel expenses within the city is not allowed.



LTA exemption: How much can you claim for LTA?


An LTA claim cannot exceed the actual amount spent on the travel and the amount paid as LTA by the employer.


While planning your trip, keep in mind that LTA can be claimed only for certain travel expenses.

Only travel expenses (air/rail/road) for the shortest route between origin / base location and destination will be exempt from tax, subject to the following limits:


  • In case the journey is performed by air: Economy airfare of the national carrier for the shortest route or the amount spent, whichever is less.

  • In case the place of origin of the journey and destination are connected by rail but the journey is performed by any mode of transport other than air: Air conditioned first class rail fare for the shortest route or amount spent, whichever is less.

  • In case the place of origin of the journey and destination are not connected by rail:

  • Where a recognised public transport system exists: 1st class or deluxe class fare on such transport by the shortest route to the place of destination; and

  • Where no recognised public transport system exists: air conditioned first class rail fare for the shortest route, as if the journey had been performed by rail.


How to claim LTA: Documents you need to submit to your employer


There is no defined process to claim LTA exemption given in the Act or Income - tax Rules, 1962 (Rules). However, Rule 26C of the Rules provides that the employees shall submit evidence of expenditure in Form 12BB for the purpose of determining the tax exemption and taxable income.


Practically, the following documents can be submitted to the employer to claim LTA exemption:


i. Original bills of journey such as bus tickets, railways tickets, etc

ii. In case of travel to a place where train or air facility is not available, original bills issued by a car rental company in case of car hire

iii. In the case of air travel, air tickets and boarding passes

iv. Bank/credit card/debit card/ wallet statements from which the payments were made


The above documents should be submitted with signed Form 12BB as evidence of expenditure.


It is better to submit all the LTA related documents to the employer during the relevant financial year because claiming it later, during ITR filing, can be time consuming.



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