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Leave Travel Allowance

Leave Travel Allowance (LTA ) is one of best Tax saving tools available to employees.

As per the Rules, you can claim the LTA benefit only twice during the block of 4 years. For this purpose, following condition should be satisfied:

1. You should be on leave.
2. You should travel any where in India.
3. During such travel you may have your family with you.
4. LTA is part of your salary component.

Family includes spouse, children as well as dependent parents, brothers and sisters.

In respect of children born on or after 1.10.98, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births.

The travel expense incurred by you is exempt up to the LTA received.

Obviously, if your wife and other family members travel, without you accompanying them, no LTA can be claimed.

FAQ on claiming LTA benefit and Income tax planning is answered below:

1. Can we Claim LTA Every Year? Sumit, Delhi
One of the most common questions about LTA is whether it can be claimed every year or not? The answer is Yes – you can claim LTA every year, but you will not be able to claim LTA exemption ever year.
Other Points About Tax On LTA
a) If you do not wish to claim LTA in one particular year you can have your employer carry forward your LTA for the next year.
2. Is entire cost of travel covered under LTA? Jaya , Bangalore
A The entire cost of the holiday is not covered. Only the travel costs are covered. So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.

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Also LTA benefit is limited to LTA given by your employer in your salary.

3. Can I claim LTA for my elder Brother? Ramesh , Amritsar
A LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.

For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).

If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.
4. What is Concept of Block years for getting LTA benefit? Sunil, Pune
A LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).

The current block is 2010-13 — January 2010 to December 2013.
During this time period, a person is entitled to two LTA claims.

5. I was not able to claim Leave in last block. Can I claim it now? Venkat, Kerala
A You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block.
Let’s say you do not take your LTA in 2006-09. Or that you use only one LTA. Don’t worry, you will be able to take the pending LTA in 2010. This means that, in the 2010-13 block, you will be totally entitled to the three journeys.

6. I am entitled for LTA of Rs 45000/- but I have made travel of Rs 25000 /-. How can I claim balance? Kamal, Gurgaon
A If your LTA is not utilised, it gets added to your salary and you will be taxed on it.
Rs 20000/- short utilised would be paid as normal part of your salary after deducting income tax as per your Income tax slab.

7. I have changed job and i was not able to claim LTA for last year? Can i do it now? Satish, Banglore
A If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilized.
For example: in the 2006-09 block, you claimed LTA in 2007. In 2008, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.

8. I performed journey by plane. Will I get LTA benefit? Puneet, Mumbai
A In case of journey performed by air, then you can get the LTA benefit for :Economy Air fair of National carrier by the shortest route or the amount spent which ever is less.

9. I performed journey by first Class Rail . Will I get LTA benefit? Amit, Mumbai
A In case of journey performed by rail, then you can get the LTA benefit for : A.C. first class rail fare by shortest route or amount spent which ever is less.

10. What if Place of origin and destination place of journey connected by rail but journey performed by other mode of transport.. Will I get LTA benefit? Amit, Mumbai
A Amount exempted for LTA will be – A.C. first class rail fare by shortest route or amount spent which ever is less.

11. Can a holiday package be claimed for LTA exemption? Rahul, Gurgaon
A Holiday package can be claimed for LTA exemption.

LTA exemption can be claimed only for travel – if your holiday package included hotel and sightseeing (which it normally does) – you won’t be able to take an exemption for that.
Also, LTA exemption can be availed for family – ie your spouse, dependent children, dependent brothers or sisters only, so if you have taken a holiday with your extended family or children who are no longer dependent on you, then you can’t claim LTA exemption on that part of the expense.

12. Can both husband and wife claim LTA exemption ? Manish, Ahmedabad
A If you and your wife both get LTA – both of you can’t claim exemption for the same travel but you can avail LTA benefit for different travel.

So effectively between the two of you, you can claim exemptions four times in four years.

Leave Travel Allowance (LTA) is an actual expense based allowance provided to an employee for travelling within India during the leave period.

It is also referred to as Leave Travel Concession (LTC).

This allowance can be in form of:

1. Reimbursement of Travel Expenses,
2. Concession in Ticket Price, or
3. Free Ticket

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Travel allowance policy differs from one employer to another but the tax law provides a standard rule.

In this article, we will cover the taxation of LTA, its exemption limit and many more.

LTA- Leave Travel Allowance [u/s 10(5)]

A person can get the exemption of travel allowance received from:

1. Current Employer for travelling during the leave period, or
2. Former Employer after his retirement or termination

This allowance is limited to the actual expenditure incurred for self and family on travel within India.

For a person, an LTA exemption is available for the following family members:

1. His Spouse and children (including step and adopted), and
2. His Dependent parents, brother and sister

Further, there are various rules which need to fulfil while claiming this allowance.

LTA Rules and Exemption Limit [Rule 2B]

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This allowance can be availed for 2 journeys (back and forth) in a block of 4 calendars* years.

LTA used from 1st April 2017 to 31^st March 2018 will be allowed as the deduction in the assessment year 2018-19 even if it falls under both current and next block periods.

*Calendar Year starts from January and ends in December.

Carry-over of Unused Leave Travel Allowance

If a person did not use travel allowance (LTA) once or twice during any of the specified 4 years block periods, he can still use 1 (one) unused allowance in the calendar year immediately following that block period.

In this case, the exemption so availed will not be counted for calculating 2 journeys for the next block of 4 calendar years.

Example:

Mr.Sonu, a central government employee, was entitled to avail 2 LTA during the calendar year 2014, 2015, 2016 and 2017 [Previous block of 4 yrs].

Suppose he fails to avail both LTA, then he can still use 1 (one) LTA in calendar 2018 i.e Jan 2018 to Dec 2018.

He can still have 2 additional LTA during the calendar year 2018, 2019, 2020 and 2021. [Current Block of 4 yrs]

LTA Exemption Limit and its Calculation

LTA exemption is allowed up to the actual travel fares.

The maximum travel fare which can be claimed as the exemption is given below:

Calculation of LTA:

Mr.Raman travels to Pune through Indigo Airlines:

Airfare paid for both way flights – Rs. 12,000/-

Airfare reimbursed by the Employer- Rs.10,000/-

Air Fare for the shortest Route- Rs.8,000/- [wild guess]

Calculate the exempted and taxable LTA.

Solution:

Exempted LTA: Rs.8,000/- [LTA exemption cannot exceed the economic Airfare for the shortest route]

Taxable LTA: Rs.2,000/- will be taxed as salary Income [10000-8000]

Note:

1. LTA exemption is also available to foreign employees.
2. Travel bill should be saved for future reference.
3. The employee should submit those travel bill along with form 12BB
4. LTA is only for travel expenses i.e food, sightseeing, hotel or any other expenses on travel are not eligible for exemption.
5. LTA can be claimed for a maximum 2 children if born on or after 01^st October 1998. In other words, LTA can be claimed for multiple children if they are born before 01-10-1998.
6. Childs born as twin or more shall be considered as 1 child if they are born after the birth of person’s 1^st
7. International travel is not eligible for LTA exemption.

Recommended to Read: 10 Popular Allowance for Salaried Person

Happy Learning!