LTA is given to an employee from his employer to cover his travel expenses when he is on leave from work. The amount of LTA provided to employees depends on their grade and designation. Leave Travel Allowance is also referred as Leave travel concession (LTC).If an employee has LTA as part of his salary, then this allowance can be availed only for a trip within India. LTA is not applicable on foreign travel. LTA has certain tax concessions associated with it.
LTA covers travel for yourself and your family. Family, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children. LTA can be claimed if the employee has actually travelled.
To claim LTA, the mode of travel should be either air, railway or public transport. Only cost of travel is covered . Hotel, Food , Sightseeing are not included in LTA.
|For journeys performed by Air||Economy air fare of national carrier by the shortest route or the actual amount spent on travel whichever is less is exempt from tax.|
|For journeys performed by Rail||A.C. first class rail fare by shortest route or actual amount spent on travel whichever is less is exempt from tax.|
|Origin and destination spots of journey are connected by rail but journey is performed by other mode of transport and not air or rail||A.C. first class rail fare by shortest route or actual amount spent on travel, whichever is less is exempt from tax.|
|Origin & destination points are not connected by rail or air (partly/fully) but connected by other recognized Public transport system||First class or deluxe class fare of such transport by shortest route or actual amount spent on travel, whichever is less is exempt from tax.|
|Origin & destination are not connected by rail or air (partly/fully) and also not connected by other recognized Public transport system||AC first class rail fare by shortest route (assuming that the journey was performed by rail) or the amount actually spent on travel, whichever is less is exempt from tax.|
Tax exemption on LTA cannot be claimed for more than 2 children on an individual. This restriction is not applicable if children are born before October 1st 1998. However children born out of multiple birth (twins,triplets ) after the first child will be treated as one child only. So the above mentioned restriction will not be applicable in this case also.
LTA Tax exemptions is not related to when you started your employment. The government fixes blocks of years. They are calendar years (January 1 to December 31).
The current block is 2014-17 — January 2014 to December 2017.
An individual can claim two LTA tax concessions in this block.
LTA can be carry forwarded also. If you do not use one LTA tax exemption in last block, you can carry it forward to the next block. For e,g if you did not use the LTA claim in block 2010 -2013. You can carry forward one LTA claim to the block 2014-17. However you must use one LTA exemption in the first year itself.
So in the block 2014-2017, you can have three LTA tax exemptions.
To avail LTA tax exemption, the employee has to furnish documentary evidence of the travel to the employer. In case employee does not travel or does not provide travel bills the LTA amount gets paid as part of the employee’s taxable salary .
Travel need not be from one place to another. The employee may travel to different locations on the same trip. Where the journey is performed in a circular form covering different locations places, the LTA tax exemption is limited to place of origin to the farthest point in your trip reached by the shortest route.
LTA exemption is limited to the amount of LTA paid to the employee as part of the CTC. One cannot claim exemption beyond the actual LTA amount being provided.
|(Less) LTA Exempt||XXX|
Mr ABC has LTA component of Rs 40000/- in his salary. He has travelled business class from Mumbai to Bangalore and back for Rs 30000/-. The economy class fare of national carrier is Rs 14000/-.
His employer has reimbursed the entire 40000/- to him. However out of this 40000/- only Rs 14000/- is tax free . The remaining Rs 26000/- would be taxable
Mr XYZ has LTA component of Rs 12000/- in his salary. He has travelled economy class national carrier from Mumbai to Kerala and back for Rs 15000/-.
His employer has reimbursed him Rs 12000/-. This entire amount is tax free.
Even though the national carrier cost is Rs 15000/-. The employee has a LTA component of only Rs 12000/-. Hence the maximum the employer can reimburse would be subject to the LTA salary component.