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Leave Travel Allowance (LTA) - Exemption Limit, Rules, How to Claim, Eligibility & Latest Updates

Updated on : Jun 27th, 2024

The Income-tax Act, 1961 offers salaried individuals several tax exemptions, beyond deductions like LIC premiums and housing loan interest. While deductions reduce your total taxable income, exemptions exclude specific types of income from being taxed altogether. This allows employers to design an employee's Cost to Company ( CTC ) package in a tax-efficient manner.

One such exemption available to the salaried class under the law and widely used by employers is Leave Travel Allowance (LTA)/Leave Travel Concession (LTC). LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination of service. LTA can be claimed for any two years in a block of 4 calendar years . The current block year for claiming LTA is 2022 to 2025.

Note: The tax exemption of leave travel allowance is not available in case you choose the new tax regime .

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance/Leave Travel Concession is a type of allowance given by an employer to their employee for travelling to any place in India: either on leave, after retirement or after the termination of his service. Though it sounds simple, many factors need to be kept in mind before you plan to claim an LTA exemption. Income tax provision has laid down rules for claiming exemption of LTA which are provided below.

Note: The red arrow shows the lower of the two amounts will be exempted. For instance, if you travel by air, the exemption amount will be either your actual travel costs or the cost of an economy class ticket, whichever is lower. The journey should be taken through the shortest route to the destination. 

Who Can Claim LTA?

Only individuals (citizens and non-citizens) can claim LTA for travel costs incurred for themselves and their family (Spouse, children, wholly or mainly dependent siblings, parents)

Conditions for Claiming LTA

Let us understand the conditions/requirements for claiming the exemption:

• is a must to claim the exemption
• Only domestic travel is considered for exemption, i.e., travel within India. No international travel is covered under LTA/LTC
• The exemption for travel is available for the employee alone or with his family, where ‘family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee. 
• Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restrictions. Further, in cases of multiple births on a second occasion after having one child is also not affected by this restriction.
• Valid Proof of travel is essential to claim the exemption.

Amount of LTA/LTC Exemption

The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTA provided by the employer.

For example, if LTA granted by the employer is Rs 30,000, and the actual travel cost incurred by the employee is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary income.

Exemption w.r.t Various Modes of Transport

Can lta exemption be claimed on every vacation.

No, an LTA exemption is available for only  two journeys performed in a block of four calendar years .

A block year is different from a financial year and is decided by the Government for LTA exemption purposes. It comprises 4 years each. The very first 4-year block commenced in 1986. The list of block years is 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. The block applicable for the current period is  2022-25. The previous block was the calendar year 2018-21.

Carryover of Unclaimed LTA/LTC

In case an employee has not availed exemption with respect to one or two journeys in any of the block of 4 years, he is allowed to carryover one such unavailed LTC exemption to the next block provided he avails this benefit, in the first calendar year of the immediately succeeding block. 

Consider the below example for a better understanding:

• Where carry over exemption is claimed in the first calendar year of the immediately succeeding block

• Where carry over exemption is not claimed in the first calendar year of the immediately succeeding block

Procedure to Claim LTA

The procedure to claim LTA is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc., along with the mandatory declaration. Though it is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit them to the employer based on the LTA policy of the company to tax authorities on demand.

Multi-Destination Journey

Income tax provision provides exemption w.r.t travel cost incurred on leave to any place in India. Conditions pertaining to the mode of transport also refer to the place of ‘origin’ to the place of ‘destination’ and the route which must be the shortest available route.

Hence, if an employee travels to different places in a single vacation, the exemption can only be availed for the travel cost eligible from the place of origin to the farthest place in the vacation by the shortest possible route.

LTA Exemption for Vacation on Holidays

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organisations may reject LTA claims for travel on official holidays or weekends. 

Also read about:   Basic Salary   UAN Login   Last Date to File ITR    Section 115BAC of Income Tax Act    Income Tax Deductions List   How to e verify ITR    Annual Information Statement (AIS)   Section 80D    Home Loan Tax Benefit   House Rent Allowance (HRA) Budget 2024 Highlights

Frequently Asked Questions

The amount of LTA/LTC exemption depends on the LTA/LTC component in your compensation package or CTC. You can furnish proof of travel within the block period and claim up to the amount prescribed in your CTC.

The latest block period of four years is from 1 January 2022 until 31 December 2025.

You can claim LTA/LTC exemption only for one trip in one calendar year.

You can claim LTA/LTC benefit for the travel costs of yourself and your family consisting of your spouse, children, dependent parents, brothers, and sisters of the employee.

No, LTC is taxable in case of new tax regime and exempted if chosen to pay tax under old tax regime by fulfilling the required criteria.

Exemption will be available in respect of 2 journeys performed in a block of 4 calendar years.

Yes, you can avail LTC in current block (2022-2025), if you have not availed LTC in previous block. (2018-2021). Where such travel concession or assistance is not availed by the individual during any block of 4 calendar years, one such un-availed LTC will be carried forward to the immediately succeeding block of 4 calendar years and will be eligible for exemption. 

Below example gives you clear understanding :

Example : An employee does not avail any LTC for the block 2018-21. He is allowed to carry forward maximum one un-availed LTC to be used in the succeeding block of 2022-25. Accordingly, if he avails LTC in April, 2023, the same will be treated as having availed in respect of the block 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block of 2022-25.

Illustration : Mr. D went on a holiday on 25.12.2023 to Delhi with his wife and three children (one son – age 5 years; twin daughters – age 3 years). They went by flight (economy class) and the total cost of tickets reimbursed by his employer was 60,000 (45,000 for adults and 15,000 for the three minor children). Compute the amount of LTC exempt if Mr. D chose to pay taxes under old regime.

Solution :  Since the son’s age is more than the twin daughters, Mr. D can avail exemption for all his three children. The restriction of two children is not applicable to multiple births after one child. The holiday being in India and the journey being performed by air (economy class), the entire reimbursement met by the employer is fully exempt in the hands of Mr. D, since he chose to pay taxes under the old regime.

In the above illustration, will there be any difference if among his three children the twins were 5 years old and the son 3 years old? 

Since the twins’ age is more than the son, Mr. D cannot avail for exemption for all his three children. LTC exemption can be availed in respect of only two children. 

Taxable LTC = 15,000 × 1/3 = 5,000. 

LTC exempt would be only 55,000 (i.e. 60,000 – 5,000).

No LTA/LTC exemption would be allowed if the employee does not travel along with the family.

About the Author

Ektha Surana

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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• What is Leave Travel Allowance? A Complete Guide
• Post author: fincart
• Post published: October 20, 2023
• Post category: Income Tax

Table of Contents

We all like traveling these days, don’t we? Every year we all plan to make at least one trip. But little do we know that we could claim one of the allowances if provided by your employer. It could also help you to save taxes too!  But how do you claim it? Can you claim it every year? How much amount does it cover? What is included in this? Is there an eligibility criterion to claim this allowance?

Tax deductions and exemptions provided by the Income Tax department have allowed us to save the most amount of tax possible. By using these exemptions, employers can structure employee Cost to Company (CTC) in a tax-efficient manner. Leave Travel Allowance (LTA) is an exemption available to salaried workers under the law that is also widely used by employers.  

When planning travel to claim an LTA exemption, many factors need to be considered. LTA exemptions are governed by income tax provisions: 

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) is an allowance provided by employers to employees who are on leave from work to cover their travel expenses. By the Income Tax Act, of 1; 961, LTAs are an important component of an employee’s salary, as they are eligible for income tax exemptions, making them a valuable tool for tax saving . LTA received by the employee during the year will not be included in his net income under Section 10(5) of the Income Tax Act.

Example of LTA

Assume that LTA granted by your employer is Rs 30,000, and the actual travel cost is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary.

Take another example, suppose the Leave Travel Allowance provided by the employer is Rs 25,000. The actual expenses spent on travel are Rs 30,000. Here, the LTA exemption allowed would be Rs 25,000 irrespective of a higher amount spent on travel.

Benefits of Leave Travel Allowance

1. Tax Exemption : LTA provides tax benefits as the amount spent on eligible travel expenses is exempt from income tax.

2. Family Inclusion : The allowance covers immediate family members, promoting family travel and bonding.

3. Domestic Exploration : Encourages employees to explore different parts of India, contributing to tourism and cultural exchange.

4. Reimbursement : Allows reimbursement of actual travel expenses or up to specified limits, easing financial burden on employees.

5. Employee Well-being : Promotes work-life balance by facilitating quality time with family during approved leave periods.

Conditions to claim Leave Travel Allowance exemption

The following conditions must be satisfied to claim an LTA exemption:

• You can claim LTA for travel costs incurred for yourself and your family.
• LTA can be claimed for any two years in a block of 4 years. The current block year for claiming LTA is 2022 to 2025.
• The actual journey is a must to claim the exemption.
• The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. Local conveyance, sightseeing, hotel accommodation, food, etc., are not eligible.
• The exemption is also limited to LTA provided by the employer.
• It applies to travel only within the country.

What is the eligibility for LTA exemption?

The LTA (Leave Travel Allowance) exemption for tax purposes is based on the actual travel cost. It covers expenses for a journey from the employee’s origin to the destination and back, using the shortest route by air, rail, or bus. Only the cost of travel tickets is eligible for exemption. Other expenses like conveyance, sightseeing, accommodation, shopping, and food are not allowed. If the employer’s LTA allowance is less than the actual travel cost, the exemption is limited to the employer’s provided amount.

Documents required for claiming LTA

To claim LTA, fill out the LTA application form supplied by your employer, including essential details like travel date, destination, mode of transport, and incurred costs. Alongside the application, submit supporting documents such as tickets, boarding passes, and invoices as evidence for your LTA claim. These documents are crucial to validate your travel expenses and support your application.

LTA Exemption Rules for Various Modes of Transport

The LTA claim depends on the mode of transport.

• If travel is by air, the LTA limit is Actual Expenses or Economy class air fare of the national carrier by the shortest route to the place of destination, whichever is lower.
• If travel is by rail, the LTA limit is Actual Expenses or first-class AC rail fare by the shortest route to the place of destination, whichever is lower.
• If travel is by a recognized public transport system, the LTA limit is Actual Expenses or 1st class/ deluxe class fare by the shortest route to the place of destination, whichever is lower.
• If no recognized public transport system is available, the LTA limit is Actual Expenses or first-class rail fare by the shortest route to the place of destination, whichever is lower. (It is assumed as if the journey had been performed by rail.)

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How Much Leave Travel Allowance Exemption Will You Get?

There is a limit on how much LTA an employer may provide as an exemption. For instance, if Rs. 30,000 of LTA is granted by your employer and the actual travel cost incurred is Rs. 20,000 by an employee then the exemption will only be available till Rs. 20,000. Therefore the balance of Rs. 10,000 will be included in the taxable salary income.  Procedure to Claim LTA

LTA claims are generally handled by employers. Employers announce the deadline for employees to claim LTA and may require employees to submit proof of travel along with the mandatory declaration, such as tickets, boarding passes, invoices from travel agents, etc. Although employers don’t need to collect proof of travel, it is always advisable for employees to keep copies for their records as well as to submit them to their employer on demand based on the LTA policy of the company.

What Happens to LTA If There is No Traveling Involved?

Because the LTA is part of your salary structure, it is automatically credited to your account regularly. If you do not travel or do not have a valid proof of travel, you cannot claim the LTA received for tax exemption purposes. Your net taxable income will be increased if you receive an LTA.

What expenses can be included under LTA?

Under the Income Tax Act, LTA (Leave Travel Allowance) can include the following expenses:

Travel Expenses : LTA encompasses the travel costs for the employee and their immediate family members (spouse, children, and dependent parents or siblings). The travel can be by air, rail, or public transportation, following the employer’s or Income Tax Department’s specified rules.

Destination : LTA is applicable for travel within India. Employees can claim expenses incurred on travel to any location in India during their leave period.

Mode of Travel : LTA covers expenses for travel by air, train, or other public transportation. Reimbursement is based on the actual amount spent or as per limits set by the employer or tax authorities.

Leave Period : LTA can be claimed for travel during the employee’s leave period, including annual leave, casual leave, or any other approved form of leave.

Unclaimed LTA

Unclaimed LTA is allowed to be carried forward. If an employee has not availed LTA exemption once or twice in a block of 4 years, he is allowed to carryover one exemption to the next block provided he avails this benefit, in the first calendar year of immediately succeeding block.

For example, during the 4-year block of 2014-2017, if you did not claim LTA or claimed it only once, then you will be allowed to carry forward one LTA to 2018 (first year of next block, i.e. 2018-21). Thus, from 2018 to 2021, you will be able to claim LTA three times.

Can Unclaimed LTA be Carried Over to the Next Block Year?

Under the carry-over concession rules, under which the employee can claim LTA tax breaks on three journeys made in the current block of years if he hasn’t claimed LTA in the last running block or has just claimed it once, the employee can still claim one additional LTA in the next block of calendar years. To utilize the carryover concession facility, one LTA exemption for the journey must be claimed during the first calendar year of the next block.

For instance, in the last block of the year, between 2018-2021, you made only one tax exemption claim under LTA as an employee. Therefore, you become eligible for LTA claims for up to 3 journeys in the current block, between 2022 and 2025. However, your first claim must be filed in the first calendar year of the current block, i.e. in 2022.

Also Read: Smart Tax Planning Strategies for High Earners

Leave travel allowance is an amount provided by the employer to the employee for Travelling while on Leave. This is a part of your salary which is exempted from tax.

Employees in India are generally eligible for LTA. To claim LTA, employees must undertake travel during their leave period, and the exemption is subject to specified conditions and limits set by the income tax regulations.

Under LTA, expenses related to travel within India are covered. This includes the cost of transportation by air, rail, or bus for the employee and eligible family members.

LTA can be claimed for two journeys in a block of four years and not on every financial year.

The concept of “block years” in the context of LTA (Leave Travel Allowance) refers to a four-year block set by the income tax authorities. This block consists of four consecutive calendar years, during which an employee is allowed to claim LTA for up to two trips.

No, LTA (Leave Travel Allowance) is specifically applicable for domestic travel within India.

For LTA exemption, the costs incurred for family members traveling with the employee are allowed. Family members include spouses, children, dependent parents, and dependent siblings.

The exemption can be claimed for up to two children if born on or after 1st October 1998.

LTA exemption is calculated as the least of the actual travel expenses incurred on a trip within India or the fare of the equivalent journey by the shortest route in the chosen mode of transportation (air, rail, or bus). Again, it is limited to the LTA component in your compensation package or CTC.

If an employee doesn’t travel at all or lacks valid proof of travel, they cannot claim LTA for tax exemption purposes. In such a scenario, the received LTA amount is treated as a part of the employee’s taxable income.

If an employee does not fully utilize their LTA entitlement in a particular block of four years, it can be carried over to the next block. But the employee is usually required to utilize this carryover LTA in the first calendar year of the immediately succeeding block.

If the unutilized LTA is not claimed within the first year of the next block, it will expire and would not be allowed to be claimed later on.

Yes, there is a specific deadline for employees to claim LTA. Usually, LTA can be claimed for exemption twice under the block of 4 years.

No, LTA (Leave Travel Allowance) is specifically designed for personal travel during leave periods and cannot be claimed for business trips or official travel.

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LTA (Leave Travel Allowance): Meaning, Rules, Tax Exemptions and Conditions to claim

Hiral Vakil

Travelling offers a wide range of benefits. Taking time away from daily routine can reduce stress and improve mental and emotional well-being. However, vacations can be expensive. Income Tax provides various exemptions on such expenses to salaried individuals. One such exemption available is LTA i.e. Leave Travel Allowance. LTA is an allowance employers give to their staff for vacations in India.

LTA: Meaning

Conditions to claim lta exemption, leave travel exemption: eligibility, how to claim exemption on leave travel allowance.

Leave Travel Allowance is an allowance employers give to their employees as a part of CTC for travelling alone or with family to any place in India : 

• either on leave or
• after retirement from service or
• after termination of service.

Income tax has laid down rules for claiming exemption of LTA.

Section 10(5) of the Income Tax Act along with Rule 2B has prescribed the conditions and limit of exempt leave travel allowance.

• Leave travel allowance should be a part of the employee’s salary structure.
• An exemption is available for actual expenses incurred by the employee including their family for domestic travel only.
• Spouse and children
• Parents, brothers, and sisters who are wholly or mostly dependent on the employee.
• Further, this exemption can be claimed for a maximum of two children born after 01/10/1998. For children born prior to this date, there is no restriction.
• It covers only the cost of travel for the trip (travel by rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
• An exemption is available only for two trips in a block of four calendar years . The current block for leave travel is from 2022 to 2025.
• If an exemption is not availed during the block period, it can be carried over to the next block and used in the first year of the next block.

Let’s understand with an example:

Let’s say, an employee does not avail Leave Travel allowance for the block of 2018-2021. He is allowed to carry forward a maximum of one unavailed LTA to be used in the succeeding block of 2022-2025. Accordingly, if he avails LTA in April 2022, the same will be considered for the block of 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block 2022-2025.

The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accommodation, food, etc are not eligible for this exemption. It is also limited to the LTA provided by the employer. For example: If the actual expense incurred is INR 50,000 but LTA as part of Salary is INR 35,000 then the maximum exemption available would be INR 35,000 only.

Exemption when various modes of transport are used for travel

Employees can claim Leave Travel Allowance exemption by submitting details in Form 12BB . They should submit the proof in support of their claim. Further employees can submit boarding passes, air tickets, train tickets, invoices from travel agents, etc, as documentary proof to their employers.

No, LTA can be claimed only for domestic travel. You can only claim LTA if the Employer provides it as part of your salary.

If an employee travels to different locations on a single vacation then the exemption available will be for the travel cost eligible from the place of origin to the farthest location by the shortest route possible.

It depends on the organisation’s policies as many companies allow LTA exemption only if employees take specific leave for vacation and not on official holidays or weekends.

No, You can claim LTA exemption only twice in a block of 4 calendar years. The current block of four years is 2022-2025.

Employees are advised to maintain proof such as flight tickets, invoices from travel agents, passes, etc. as they have to be submitted to the employer.

Employees can know the exempt Leave Travel Allowance amount from Form 16 issued by the employer at the end of the financial year. It is exempt u/s 10(5) of the Income Tax Act.

Since Leave Travel Allowance is a part of salary income, an employee can file ITR-1 while claiming exempt LTA. However, salaried need to file ITR-2 if their income is more than Rs. 50,00,000.

Got Questions? Ask Away!

Hey @sushil_verma

There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens ) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA) , conveyance , transport allowance, medical reimbursement , etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

• Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
• Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
• Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

No issues. You’re welcome!

Hey @shindeonkar95

In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

Hope, it helps!

Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

I couldn’t find anything on this. Any help is appreciated.

Hello @Veejayy ,

Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

Also, interest earned on these bonds will be taxable.

Hope this helps!

Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

Hey @Sheirsh_Saxena , yes, the investment amount needs to be added under 80C.

Continue the conversation on TaxQ&A

90 more replies

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Last Updated on 10 months by Shreya Sharma

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Don't forget to claim your lta tax exemption this year: here is how.

LTA exemption is available for 2 journeys in a block of 4 yrs. While the current block is 2022-25, one can undertake three journeys in the current block provided only one journey was undertaken in the last block (2018-2021) and no tax exemption has been availed under the LTC Cash Voucher scheme for FY 2020-21.

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Leave Travel Concession/Allowance (LTC/LTA)

Leave Travel Concession (LTC) is a type of benefit provided to employees by their employers to travel within the country during their leave period. The objective of this benefit is to encourage employees to take a break from work and explore new places while spending quality time with their family. The LTA/LTC scheme was introduced in the year 1986 by the Government of India to help employees working in government or public sector undertakings to travel and enjoy their time off. The scheme has since been extended to employees of private companies as well. Under the scheme, an employee can claim reimbursement for the travel expenses incurred during the leave period. The reimbursement is subject to certain conditions and restrictions, such as the distance of travel, the mode of transport used, the number of family members traveling, etc. The employee is required to submit the travel bills and other supporting documents to the employer to claim the reimbursement.

What is Leave Travel Allowance?

Leave Travel Concession (LTC) is a benefit provided by employers to their employees to travel within the country during their leave period. The objective of this benefit is to encourage employees to take a break from work and explore new places while spending quality time with their family.

Section 10(5) of the Income Tax Act, 1961 with Rule 2B ensures the exemption of tax and also details the conditions subject to tax exemption. Income tax provision has laid down rules for claiming exemption of LTC/LTA which are provided below.

Conditions for Claiming LTC/LTA

Let us understand the conditions/requirements for claiming the exemption.

• Actual journey is a must to claim the exemption
• Only domestic travel is considered for exemption, i.e., travel within India. No international travel is covered under LTC/LTA
• The exemption for travel is available for the employee alone or with his family, where ‘family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee.
• Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restrictions. Further, in cases of multiple births on a second occasion after having one child is also not affected by this restriction.

Eligible LTC/LTA Exemption

The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTC/LTA provided by the employer.

For example, if LTA granted by the employer is Rs 30,000, and the actual eligible travel cost incurred by the employee is Rs 20,000, the exemption is available only to the extent of Rs 20,000, and the balance of Rs 10,000 would be included in taxable salary income.

Exemption w.r.t various modes of transport

Procedure to Claim LTC/LTA

The procedure to claim LTA is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc., along with the mandatory declaration. Though it is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit them to the employer based on the LTA policy of the company/to tax authorities on demand.

Frequently Asked Questions

Who is eligible for LTA?

LTA/LTC is usually available to employees of government or public sector undertakings, as well as employees of private companies who have been granted this benefit by their employers.  

What exactly does Leave Travel Allowance cover?

Leave Travel Allowance covers only the travel expense incurred during the travel.

Can LTA exemption be claimed for Vacation on Holidays?

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organisations may reject LTA claims for travel on official holidays or weekends.

  How often can an employee claim LTA?

An employee can claim LTA/LTC twice in a block of four years. The current block of years is from 2022 to 2025.

What is the minimum trip duration under LTA/LTC?

According to Rule 8 of the Central Civil Services (Leave Travel Concession) Rules, 1988, an employee must undertake a journey of a minimum of three days to be eligible for the LTA/LTC benefit. The rule further states that the journey should be undertaken to a place that is different from the place of work and the employee’s residence. This rule applies to employees of the Central Government and is also followed by many State Governments and Public Sector Undertakings.

It is important to note that the LTA/LTC rules may vary for employees of private companies and other organizations. Employers may have their own guidelines and policies regarding the LTA/LTC scheme. Employees should check with their employer to understand the specific rules and conditions applicable to them.

How can an employee claim LTA/LTC?

To claim LTA/LTC, an employee must inform their employer about their proposed travel plans and apply for leave. The employee must then submit the travel bills and other supporting documents to the employer within a stipulated time frame. The employer verifies the documents and reimburses the employee for the eligible expenses.

What happens if an employee does not utilize the LTA/LTC benefit?

If an employee does not utilize the LTA/LTC benefit during the block of years, they can carry it forward to the next block of years. However, the employee must utilize the LTA/LTC benefit within the first year of the next block of years. If the benefit is not utilized within the stipulated time frame, it will lapse.  

Can LTA/LTC be availed for international travel?

No, LTA/LTC can only be availed for domestic travel within India.

Can an employee claim LTA/LTC for travel to their hometown?

Yes, an employee can claim LTA/LTC for travel to their hometown, provided that the hometown is located at a distance from the place of work and the employee’s residence.

Can an employee claim LTA/LTC for travel during their probation period?

Generally, employees who are on probation are not eligible for LTA/LTC. However, some employers may have their own policies on this and may allow employees on probation to claim LTA/LTC.

Can an employee claim LTA/LTC for travel by a private car?

Yes, an employee can claim LTA/LTC for travel by a private car, subject to certain conditions. The reimbursement amount is usually limited to the amount that would have been paid if the employee had travelled by public transport.

Can an employee avail of LTA/LTC for travel during the notice period?

An employee can avail of LTA/LTC during the notice period, provided that they have already applied for and obtained leave for the travel period before the notice period begins.

Can an employee claim LTA/LTC for travel to attend a family function?

No, an employee cannot claim LTA/LTC for travel to attend a family function, such as a wedding or a funeral. LTA/LTC can only be availed for travel during the employee’s leave period for the purpose of leisure travel.

Can an employee carry forward unutilized LTA/LTC to the next block of years?

Yes, an employee can carry forward unutilized LTA/LTC to the next block of years, but they must utilize it within the first year of the next block of years.

Can an employee claim LTA/LTC for travel to a foreign country if they travel by land or sea from India?

No, an employee cannot claim LTA/LTC for travel to a foreign country even if they travel by land or sea from India. LTA/LTC is only applicable for travel within India.

Can an employee claim LTA/LTC for travel during a period of leave without pay?

No, an employee cannot claim LTA/LTC for travel during a period of leave without pay. LTA/LTC can only be availed during the employee’s leave period.

Is there a limit on the amount that can be claimed under LTA/LTC?

Yes, there is a limit on the amount that can be claimed under LTA/LTC. The reimbursement amount is usually limited to the actual expenses incurred by the employee, subject to certain conditions and restrictions.

Can an employee claim LTA/LTC for travel expenses incurred for their dependents?

Yes, an employee can claim LTA/LTC for travel expenses incurred for their dependents, such as their spouse, children, and parents. However, there may be restrictions on the number of dependents who can travel.

Can an employee claim LTA/LTC for travel to multiple destinations?

Yes, an employee can claim LTA/LTC for travel to multiple destinations, provided that the total cost of travel does not exceed the eligible amount.

Can an employee claim LTA/LTC for travel to attend a business conference or seminar?

No, an employee cannot claim LTA/LTC for travel to attend a business conference or seminar. LTA/LTC can only be availed for leisure travel during the employee’s leave period.

Can an employee claim LTA/LTC for travel by a rented vehicle?

Yes, an employee can claim LTA/LTC for travel by a rented vehicle, subject to certain conditions. The reimbursement amount is usually limited to the actual rental charges paid by the employee.

Can an employee claim LTA/LTC for travel if they are on medical leave?

No, an employee cannot claim LTA/LTC for travel if they are on medical leave. LTA/LTC can only be availed during the employee’s leave period for leisure travel.

Can an employee claim LTA/LTC for travel during the first year of their employment?

Generally, employees who are in their first year of employment are not eligible for LTA/LTC. However, some employers may have their own policies on this and may allow employees in their first year of employment to claim LTA/LTC.

Can an employee claim LTA/LTC for travel if they have resigned from their job?

An employee can claim LTA/LTC if they have resigned from their job, provided that they have already obtained leave for the travel period before their resignation. The reimbursement amount will be subject to certain conditions and restrictions.  

Disclaimer:  This document is strictly private, confidential and personal to its recipients and should not be copied, distributed or reproduced in whole or in part, nor passed to any third party. The views expressed in this write-up are matters based on our understanding of the law and regulations prevailing as at the date of this write-up and our past experience with the tax, regulatory and other authorities as may be applicable. However, there can be no assurance that the tax authorities or regulators will not take a position contrary to our views.

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Name: Keshaba Palo

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Sir, we are given to understand that the journey should be performed by State run public transport wherever available. But your article says that the journey can be performed by private taxi. Can you please clarify this sir? We find it difficult to convince our employees when our top management says one thing and articles like this say something else.

Can wrongly mentioned BLOCK YEAR be rectified

The time limit to generate e-invoice on IRP for all tax invoices issued is within seven days it is applicable on May 1st. What If my invoice Date is on April 30th I should generate an e-invoice on IRP within 7 days?

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Written by admin • December 21, 2023 • 11:08 am • Payroll Management

Leave Travel Allowance (LTA) – Rules, Claims, Exemption and Eligibility

Table of Contents

Leave Travel Allowance (LTA) is a financial benefit for all employees. It helps cover domestic travel expenses for two trips in a block of four financial years. The LTA amount is tax-free. It is one of the best tax-saving tools available to an employee. It is a tax exemption employers offer to their employees.

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance is an allowance employers offer their employees for domestic travel. This allowance allows employees to take a vacation where travel costs are tax-free. LTA is available for any two years within a four-year block. Employees must submit the bills and travel documents to their employer to take advantage of the LTA tax benefit.

People who can Claim Leave Travel Allowance (LTA)

Only employees and their spouses, children, dependent siblings and parents can claim LTA. This exemption does not apply to more than two of an employee’s children if they are born after October 1 1998.

Rules for Claiming LTA

The rules for claiming LTA are as follows:

• LTA does not cover international travel. Employees can only use domestic trips to make the claim.
• The employee’s family members are also allowed to use LTA to cover the cost of their travel. The family members for this purpose include spouses, up to two children(if born after October 1 1998), dependent parents and siblings.
• The employee’s salary structure must mention the LTA.
• Only the cost of travel is taken into consideration for tax exemption. No other expenses like hotel accommodation, food, or shopping qualify for this exemption.
• An employee can claim LTA two times in a block of four years.
• LTA can be claimed for travel by any mode of transport, like air, train, or road.
• If LTA isn’t claimed in a particular block of four years, it can be carried over to the next block.

Eligibility for Leave Travel Allowance (LTA)

Only the cost of travel of an employee is eligible for claiming LTA. Expenses such as local sightseeing, hotel accommodation, food, shopping, etc., are not eligible for this exemption. If the LTA provided by the employer is less than the actual cost of travelling, the exemption will be limited to the LTA amount specified by the employer rather than the actual cost.

For example, if the employer offers an LTA of Rs. 25,000 and the employee’s travel costs Rs. 35,000, an LTA exemption can only be claimed for Rs. 25,000.

LTA Exemption for Various Modes of Transportation

• Travel by air: If an employee travels by air, the exemption would be the economy class airfare by the shortest route to the travel destination.
• Travel by train:  If an employee travels by train, the exemption would be the fare of an AC first-class train ticket for the shortest route.
• Travel by other modes of transportation: If the destination is not connected by air or train, the exemption would be the fare of an AC first-class train ticket for the distance of the journey for the shortest route, whether connected by train or not.

LTA for Multi-Destination Trips

If an employee goes on vacation and visits multiple cities, in that case, the exemption will cover the cost of round-trip travel from their home city to the farthest city they visit and back. In other words, the LTA will cover the most expensive leg of their journey.

For example, suppose the employee resides in Delhi and travels to Mumbai, Goa, and Chennai for vacation. In that case, round-trip travel from Delhi to Mumbai is Rs. 4,000, from Delhi to Goa is Rs. 5,000, and from Delhi to Chennai is Rs. 7,000. In this scenario, the LTA exemption would be Rs. 7,000, which is the cost of the round-trip travel from Delhi to Chennai and back. Even though the employee visited multiple cities, the LTA will cover the expense of the farthest city visited and the return journey, which in this case is Chennai.

Claiming LTA in case of a Job Change

An LTA exemption would be available even if an employee changes their job. If the change happens within the block and there is any unutilized LTA, it can be claimed with the new employer. However, if the employee has already availed of the LTA, it would not be allowed by their new employer.

Unclaimed LTA

LTA exemption is available for two trips in a block of four years. However, if the employee does not take two trips within the four-year block, only one unutilized LTA is carried forward to the next block of years. However, to claim the unutilized LTA, the employee must take a trip in the first calendar year of the next block; otherwise, it will expire.

LTA Exemption for Vacation on Holiday

Under the Income Tax Act 1961, the LTA exemption is only allowed when an employee applies for a leave from work and then travels on vacation. Employees who take their vacation on official holidays or weekends cannot claim LTA.

Documents Required for Claiming LTA

Documents like the LTA form and proof of travel, such as tickets and boarding passes, are required to claim LTA.

Procedure to Claim LTA

Every employer announces the due date before which employees can claim LTA and may ask employees to submit proof of travel, such as tickets, boarding passes, invoices provided by travel agents, etc., along with the mandatory declaration. Though employers don’t need to collect proof of travel, it is always prudent for employees to keep copies for their records and submit them to the employer based on the company’s LTA policy or to the tax authorities on demand.

It is crucial for employees to meticulously document their travels, be aware of submission deadlines, and stay up to date with any changes in regulations. Understanding LTA  provides potential tax savings and the opportunity to explore new destinations. As you embark on your next adventure, confidently navigate the roads, armed with the understanding of how to make the most of your Leave Travel Allowance. Safe travels!

FAQs about Leave Travel Allowance (LTA)

What does leave travel allowance cover.

Leave Travel Allowance covers the travel expenses incurred during a trip.

How many times can an employee claim Leave Travel Allowance?

An employee can claim LTA only twice in a block of four years.

Is international travel covered under Leave Travel Allowance?

No, international travel is not covered under Leave Travel Allowance.

Which section of the Income Tax Act allows an exemption for LTA?

Section 10 (5) of the Income Tax Act, 1961 allows LTA exemption.

If an employee’s parents-in-law travel with him, would the travel costs for the parents-in-law be claimed as an exemption?

No, LTA exemption cannot be claimed for travel costs for the parents-in-law of an employee.

Can only the travel costs of the family members be claimed as LTA if the employee does not travel?

No LTA exemption would be allowed if the employee does not travel, even if their family members travel.

What would happen if the employee did not travel in a block of four years?

LTA exemption is prohibited if the employee does not travel in a block for four years. However, one unutilized LTA can be carried forward to the next block.

Can I claim an LTA exemption twice in one financial year?

No, only one LTA exemption can be claimed in one financial year.

What is the latest block period to claim LTA exemption?

The latest block period to claim LTA exemption is from January 1 2022, until December 31 2025.

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Confused about how to claim lta here’s everything you need to know.

Make sure to keep all your travel bills handy before claiming Leave Travel Allowance. Here’s how to make the most of it. Read on.

During the end of each financial year, employees coming under the taxable limits specified by the Income Tax Department get busy to find out ways to minimise the amount they need to pay to the Government as a tax. LTA or Leave Travel Allowance stands for a type of tax exemption that most of the employees get from their employer.

Do you get the same but not sure on how to claim this exemption? Here are a few basic things you need to know.

Provisions Relating To LTA

Section 10 (5) of the Income Tax Act 1961 deals with LTA and also specifies the conditions relating to it. Read the provisions in detail for any case-specific clarifications. LTA can be claimed only if you have taken leave from your job for travel purposes.

Proof Of Travel

Tax authorities do not always need proof of travel to exempt LTA, but employers will ask for a proof in most cases to either reimburse that amount or give you an exemption, depending on how your salary is structure. Always keep travel documents like a boarding pass, flight tickets, duty pass or other similar papers to prove the travel, and try to make sure they correspond with your leave dates.

What Is Covered Under LTA

LTA basically covers the expenses incurred by the employee for his own and family member’s travel. Spouse, parents, siblings and children are considered to be family members as far as the provisions relating to LTA are concerned. Travel cost incurred by the employee to book tickets for any other relatives will not qualify for exemption under LTA provisions.

It is also important to note that the costs incurred during the entire trip, which includes food, shopping and other expenses are not covered under tax exemption. The exemption is also not available for more than two children of an individual born post October 1, 1998.

If an employee books air tickets for the travel then his/her ticket cost should be equal to or lower than the limit allotted for LTA.

What Type Of Travel Is Considered Under LTA

LTA is only for domestic travels and does not cover international trips. LTA can be claimed by both the husband and wife in case both of them are working and the employer offers Leave Travel Concession. However, both of them cannot claim LTA for the same trip. Similarly, LTA cannot be claimed for the travel of only family members if the claimant is not travelling along.

Claiming LTA

You should check your pay structure before you plan to claim LTA as it is not a common part of the salary structure. It varies for one employee to the other. In case you are eligible for an LTA, you will be required to produce proof for your travel according to the criteria. You would be given a form to be filled along with travel documents like tickets, boarding passes and submitted to the relevant department once a date is announced for the same. This needs to be done before the final calculation for tax liability is done by the employer.

How To Claim LTA For A Multi-destination Journey

You need not worry if you are planning a multi-destination journey with your family. To claim LTA, travel need not be from one destination to the other. If you visit multiple places one after the other, LTA can be claimed for the journey from the place of origin to the farthest point you travel to by the shortest route. Just make sure to keep all travel proofs handy.

Making Journeys In A Block

LTA is provided for two travels made in one block. If you claim only one LTA in a block then the remaining LTA can be carried forward. However, it has to be claimed in the first year of the next block. Hence, in one block an employee can claim a maximum of three LTAs.

LTA forms an integral part of our salary structure as the concession is provided by the government to encourage employees to travel. So plan your travel well and spend some quality time with your family and enjoy your vacation well.

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How Leave Travel Allowance Works: A Complete Guide

• Written by: Rinaily Bonifacio
• Last updated: 25 April 2024

This guide will walk you through what Leave Travel Allowance (LTA) is, why it’s beneficial to offer it, and who qualifies for it under U.S. labor laws.

Table of contents

What is leave travel allowance?

Who is eligible to receive lta, leave travel allowance rules for different modes of transport, components of leave travel allowance, how to claim leave travel allowance, frequently asked questions.

Leave Travel Allowance (LTA) is a type of benefit employers can offer to their employees to cover travel costs for vacations. Essentially, it's a way to encourage employees to take time off and travel, helping them refresh and return to work re-energized.

This allowance typically covers travel expenses incurred by the employee during their leave. Importantly, under the Income Tax Act, certain conditions allow this allowance to be tax-free, which means employees can claim LTA tax exemption on travel expenses without increasing their net taxable income.

Should you provide leave travel allowance to your employees?

Offering leave travel allowance can be a smart move for your business. Here’s why:

Boosts employee morale : Providing LTA shows that you care about your employees' well-being outside of work. This can boost job satisfaction and improve company loyalty.

Tax benefits : Both you and your employees can enjoy tax exemptions on travel costs. This means while your employees save on taxes, your company can also benefit from reduced payroll taxes.

Attracts talent : In competitive job markets, offering LTA can make your company stand out. Potential hires often look for benefits that enhance work-life balance , and LTA does exactly that.

Eligibility for leave travel allowance is generally outlined by an employer’s policies. Typically, full-time employees are eligible for LTA, but there are nuances depending on the company's specific regulations and the agreements in place. Here are some common criteria used to determine eligibility:

Employment status : Full-time employees are usually eligible, whereas part-time or temporary employees may not be.

Length of service : Some companies require employees to have been with the company for a certain period, e.g., at least one year.

Performance metrics : In some cases, eligibility might be tied to meeting certain performance goals or criteria.

Conditions under which LTA is granted

LTA is not automatically given for any travel. Here are the conditions typically required for an employee to claim leave travel allowance:

Travel with dependents : Often, LTA can be claimed when traveling with family members such as spouses, children, or dependent parents.

Approved leave duration : The travel must occur during a period of approved leave from the company. The duration of this leave might also be specified in the LTA policy.

Domestic travel : Typically, LTA covers domestic travel expenses. International travel may not qualify unless specified by the employer.

LTA offers tax benefits on travel expenses under certain conditions as per the Income Tax Act. These benefits, however, can vary based on the mode of transport used during travel. Here's an overview of how LTA rules apply to different modes of transport:

1. Air travel

Eligibility : LTA covers economy class airfare for domestic flights.

Coverage : Only the airfare for the shortest route to the destination is eligible.

Documentation : Airline tickets and boarding passes must be preserved and submitted to claim LTA.

2. Rail travel

Eligibility : All classes of train travel within the country are covered by LTA.

Coverage : Like air travel, only the fare for the shortest route is considered.

Documentation : Train tickets or e-tickets, along with proof of journey such as reservation slips, are required for LTA claims.

3. Road travel

Eligibility : If the destination is connected by rail but the journey is performed by other modes of road transport, LTA covers first-class or deluxe class fare of such transport, typically up to the amount that would have been incurred if the journey had been undertaken using the highest class of train available to the destination.

Coverage : For places not connected by rail, LTA is allowed as per the first-class or deluxe rate of fare by the shortest route to that place.

Documentation : Bus tickets, taxi receipts, or fare details are necessary when claiming LTA.

4. Waterways

Eligibility : Travel by cruise or ship within the country can also be claimed, but it’s less common.

Coverage : As with other forms, only the fare for the shortest route is eligible.

Documentation : Tickets or proof of travel expenses incurred are needed.

Special considerations:

Combination of modes : In cases where multiple modes of transport are used to reach the destination, each segment of the trip needs to be documented separately, and each needs to adhere to the LTA rules applicable to that mode of transport.

Non-covered expenses : Expenses related to accommodation, meals, and personal entertainment are not covered under LTA, regardless of the transport mode.

International travel : Typically, LTA only covers domestic travel expenses. International travel is generally not eligible for LTA unless specified by the employer.

These rules aim to provide a framework for employees and employers to understand what expenses can be claimed and the necessary documentation needed to support such claims.

Leave travel allowance is a beneficial component in an employee's salary package that helps cover costs associated with travel during leave periods. This section will delve into what types of expenses LTA can cover, what it typically does not include, and the limits and caps that apply to these allowances.

What expenses are covered under LTA?

LTA mainly aims to cover the actual travel costs incurred by an employee during official holidays or leave periods. The primary expenses that can be claimed under LTA include:

Airfare : LTA covers economy class airfare for domestic travel as per the conditions outlined by the Income Tax Act 1961.

Rail and bus fares : Tickets for trains and state-operated buses are eligible for LTA claims, providing they are the shortest routes to the destination.

Taxi fares : In cases where public transportation is not available, taxi fares between the nearest transport hub and the destination can be covered.

It’s important for employers and employees to keep receipts, boarding passes, and other proof of travel, as these are required by tax authorities to claim LTA exemption on these travel expenses.

What is not included in LTA?

While LTA covers a range of travel-related expenses, there are specific costs that are generally excluded:

Accommodation : Hotel stays and other types of lodging are not covered under LTA.

Meals and personal expenses : Food, shopping, and other personal expenditures incurred during travel are not eligible for LTA.

International travel : Only domestic travel within the country is eligible for LTA claims. Expenses for international trips are not included under standard LTA policies.

Housing loan interest : Any interest paid on housing loans during the travel period cannot be claimed as part of LTA.

Understanding these exclusions is crucial for effectively managing and claiming LTA.

Limits and caps on LTA amounts

The limits on LTA are typically defined by the employer's policy and the guidelines set forth by the Income Tax Department. Some common stipulations include:

Frequency of claims : LTA can generally be claimed twice in a block of four calendar years. Unclaimed LTA can sometimes be carried forward, but specific rules apply.

Cap on amounts : There might be a cap on the amount that can be claimed, which usually depends on the actual travel costs incurred. Employers often set these caps based on the level of the employee within the organization.

Financial year consideration : Claims must align with the financial year in which the travel occurred, influencing when and how LTA can be utilized.

Employers need to clearly communicate these limits and caps to ensure that both they and their employees can maximize the benefits of LTA while complying with all regulatory requirements.

Claiming leave travel allowance can significantly reduce employee taxable income by covering some of the travel expenses incurred during your leave. Here's a simple, step-by-step process to help you successfully claim LTA, ensuring you meet all necessary requirements and maximize your benefits.

Step 1. Check eligibility and plan your travel:

Begin by confirming eligibility for LTA with the HR department . Understand the specific terms, such as the allowed frequency of claims and permissible travel periods.

Employees should plan their travel within the scope of these terms, focusing on only domestic travel if international trips are not covered.

Step 2. Undertake the travel:

Once the leave is approved, undertake the travel. Remember, to claim LTA, employee must travel within the country and follow the shortest possible route to your destination.

Keep it in mind that LTA covers only the actual travel costs such as air, rail, or bus fares.

Step 3. Gather required documentation:

During and after the travel, collect all necessary documents that verify travel expenses. These include tickets, boarding passes, and receipts.

Ensure these documents clearly show the dates of travel, the amount paid, and the mode of transportation, as these details are crucial for LTA claims.

Step 4. Submit your LTA claim:

Fill out the LTA claim form provided by the employer. Attach all collected documents as proof of travel.

Submit this form to your HR or accounts department, depending on your company’s policy, within the specified deadline.

Step 5. Verification and approval:

The employer will verify the details of the LTA claim, ensuring all provided documents match the LTA policy’s criteria.

Once verified and approved, the claimed amount will be processed and reimbursed, or adjusted against the taxable income, as per the Income Tax Act 1961 provisions.

By following these steps and ensuring the correct documentation, employees can smoothly claim leave travel allowance and enjoy the tax benefits it offers.

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Understanding and implementing LTA in the company's benefits package can significantly enhance employee satisfaction and retention , offering both financial and morale-boosting advantages.

By familiarizing yourself with the rules, eligibility criteria, and claiming process outlined in this guide, you can ensure that your organization and its employees make the most out of this valuable benefit. Whether it's improving work-life balance or providing tax-efficient travel opportunities, LTA can be a cornerstone of a more motivated and committed workforce.

Is it possible to carry over unclaimed LTA from one block year to the next?

Yes, unclaimed LTA can be carried forward to the first year of the next block period only. However, it must be claimed in the first year of the new block; otherwise, it will be forfeited.

Can employees Claim LTA in case of a job change?

Yes, employees can claim LTA even if they change jobs, as long as they fulfill the other conditions related to the allowance, such as undertaking the travel and providing necessary documentation within the stipulated time frames of their employment period in each job.

Can LTA be claimed for family members' travel expenses alone if the employee does not travel?

No, the employee must be part of the travel. LTA cannot be claimed for the travel expenses of family members if the employee themselves does not travel. The allowance is intended to cover the travel costs incurred by the employee along with their family.

Written by:

Rinaily Bonifacio

Rinaily is a renowned expert in the field of human resources with years of industry experience. With a passion for writing high-quality HR content, Rinaily brings a unique perspective to the challenges and opportunities of the modern workplace. As an experienced HR professional and content writer, She has contributed to leading publications in the field of HR.

Please note that the information on our website is intended for general informational purposes and not as binding advice. The information on our website cannot be considered a substitute for legal and binding advice for any specific situation. While we strive to provide up-to-date and accurate information, we do not guarantee the accuracy, completeness and timeliness of the information on our website for any purpose. We are not liable for any damage or loss arising from the use of the information on our website.

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What is LTA? – Eligibility Criteria, Process, Calculation, & More

Introduced in 1986, the LTA scheme was initially rolled out for the government and public sector undertaking employees in India. Later, private sector employees were included in it too. Since then a number of employees have utilized the LTA scheme for their travel expenses. If you are a salaried employee going on leave soon, make sure you are well-versed with LTA.

This blog will help you understand what is LTA , the eligibility criteria to claim it, the procedure, conditions, and documents required, and even the restrictions and benefits of LTA.

Table of Contents

What is Leave Travel Allowance (LTA) in Salary ?

Leave Travel Allowance or LTA is an allowance that employers pay to their employees when the latter is on leave and traveling, either alone or with family within India. The amount paid to the employee as LTA is tax-free subject to certain conditions. 

The conditions and amount of the leave travel allowance are given in Section 10(5) of the Income Tax Act, 1961 along with Rule 2B of Income Tax Rules. It is important to note that employees who have opted for the new tax regime are not eligible to claim LTA. Learn personal finance to expand your knowledge on taxation and savings to manage your finances better.

Eligibility Criteria for LTA Exemption

The eligibility criteria that the employees must meet to claim leave travel allowance are as follows:

• The exemption is for salaried employees who have incurred expenses on travel. 
• The travel destination must be within India since international travel is not included in the exemption.
• Only those employees who have taken a leave from work for the purpose of travel can make an LTA claim . 
• Employees can claim LTA for a maximum of two journeys undertaken in a block of four calendar years. The current block of travel is from 2022 to 2025.
• Employees should possess proof of travel expenses in the form of boarding passes, hotel bills, etc. 
• LTA exemption can be claimed only within the specified period, after which it is deemed to lapse. 

Procedure to Claim LTA

The procedure to claim LTA is simple. Follow these steps to claim LTA in salary:

• Check Your Eligibility- Ensure you are eligible to claim LTA according to your employer’s policies as well. There is a minimum number of years of service requirement, specified by the employer before you can claim any exemption. Hence, check it before applying for LTA. 
• Plan Your Travel- To avoid any last-minute problems, make sure to plan your travel and keep proof of every travel expense, especially the tickets and the boarding passes. 
• Apply for LTA- In the LTA application form provided by the employer, fill out all the details such as date of travel, mode of travel, destination, costs incurred, number of family members, etc.
• Attach Relevant Proof Documents- Attach the travel proofs that you have collected with your LTA application. 
• Await Approval and Reimbursement- Now all you have to do is wait for your LTA claim application to be approved and then the reimbursement. Employers can either combine the LTA allowance with the salary or as a separate payment for reimbursement.

NOTE: An important point that the employees should keep in mind is that if only one LTA is claimed out of two within the block year, then the employee can claim the unused one in the next block. But this travel journey has to be made in the first calendar year of the next block, after which the unutilized LTA will expire. 

Documents Required for LTA Claim

The following are the documents required to be submitted by salaried employees to their employers:

• Travel tickets (for train, road, or air)
• Proof of expenses such as boarding passes, hotel bills, cab receipts, etc. 
• Leave approval application showing that the leave was taken to travel.
• LTA form duly filled in by the employee, detailing the exempt amount being claimed. It is provided by the employer. 
• Travel itinerary that outlines the places traveled and the duration of travel.
• PAN card details of the employee are to be provided to the employer. 
• Bank account details for receiving reimbursement for travel expenses.

Conditions for Claiming LTA

There are certain conditions that the employees must fulfill to claim LTA. These are as follows:

• The employee must actually travel to claim LTA.
• The family members covered under the rules are spouses, children, dependent parents, and dependent siblings. They must be traveling with the employee and not separately.
• The salary structure of the employee must contain LTA components.
• Only two children born on or after 1st October 1998 are covered under the exemption. There is no restriction regarding children born before this date. 
• The LTA claim can be made for any mode of travel, that is, by road, train, or air. 

LTA Exemption Rules for Various Modes of Transport

LTA covers the various modes of transport for travel. Refer to the given table to understand the exemption rules for different modes of transport:

How is LTA Calculated?

Here are the steps followed to calculate the LTA:

• First employee’s eligibility is checked based on the conditions prescribed in the employer’s policy and IncomeTax Act,1961.
• Then the cost of travel for the employee and their family members is calculated. 
• Now the maximum LTA exemption is calculated. The calculation is based on the fare for the shortest route to the destination by economy class of the national carrier. 
• Note that if the cost of travel is less than the maximum LTA calculated, then an exemption can be claimed for the actual cost of travel.
• But if the cost of travel is more than the maximum LTA calculated, then an amount only up to the maximum LTA exempt amount can be claimed. The excesses can be claimed as taxable income. 
• Once we have the final amount after all the calculations, the exemption amount is deducted from the employee’s taxable income.

LTA Claim Restrictions

Though LTA is a beneficial tax exemption for employees, there are certain restrictions as well. These are:

• LTA can be claimed only for domestic travel, that is, within the country, and not on international travel.
• The number of times you can claim LTA is limited. 
• Employees need to maintain proof of travel which can be a task for some.
• LTA exemption covers only the actual travel expenses and not the other expenses such as hotel accommodation and food bills. 
• No LTA can be claimed can be made on cash payments. You will only get an LTA allowance on payments made through bank accounts online, cheques, or any digital payment mode . 

Benefits of LTA

The following are some important benefits of LTA in salary:

• LTA is an essential source of saving tax.
• It encourages tourism and aids the travel industry.
• It also helps in cost optimization as the employees do not have to spend much. They also plan to keep in mind the allowance they will receive and the best options they have for other expenses. 
• LTA plays a role in maintaining the work-life balance as the employees can travel with their families and spend some time with them. 
• The LTA exemption claim is also flexible as it includes the travel expenses of the accompanying family members as well. Also, you can choose the mode of travel according to your requirement since all three–train, air, and road are covered under LTA. 

We have discussed what is LTA , the eligibility to receive LTA allowance, the procedure to claim LTA, the documents required, the conditions to be met, how it is calculated, and the restrictions and benefits of LTA. All of this information will help you in proceeding with your LTA application comfortably.

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Leave Travel Allowance (LTA): Everything You Need To Know

LTA is added to an employees’ salary component based on factors like pay scale, position, title, etc. The employee avails the benefits of the leave travel allowance and only if it is part of the salary structure.

Table of Content:

• What is Leave Travel Allowance (LTA)??

Example of an LTA:

• LTA eligibility for exemption

Tax Rebate on LTA

Can an employee claim lta on every vacation.

• What is the procedure to claim leave travel allowance

Benefits of claiming leave travel allowance

Apart from income tax premiums, housing loan interests, etc. the Income Tax Act, 1961 provides salaried employees tax exemptions on other variables as well. These exemptions allow employers to structure employee CTC in an efficient manner that is beneficial to both parties and is tax efficient. A leave travel allowance or LTA Is one such exemption. However, do keep in mind that if this exemption can only be availed if you stick to the old tax regime.

What is Leave Travel Allowance (LTA)?

A leave travel allowance is an exemption for compensation or assistance provided by an employer to an employee while he/she travels on leave. This allowance acts as a tax exemption to the salaried employee.

There are a few factors that will be taken into consideration before an employees’ LTA claim can be taken into account.

Under what conditions can an employee claim leave travel allowance?

• An employee must show proof of actual travel or journey.
• International travel will not be considered as LTA. An employee can claim leave travel allowance for domestic travel or travel within the country (India).
• The exemption is available for the employee who travels alone or with the family. (Family includes employees’ children, spouse and other dependent members like parents, brothers & sisters).
• The exemption is not applicable for more than two children born after October 1st, 1998.

Mr X is provided LTA of INR 15,000 by his employer, but X spends only INR 5,000 on travel, then his exemption is limited to only INR 5,000 since the exemption is only valid for travel expenses and not other costs such as accommodation and food.

The following are a list of expenses that are eligible to be exempted under LTA or leave travel allowance:

• Air Travel: Amount spent or economic airfare (National Carrier only, Indian Airlines or Air India) by the shortest route to the destination.
• Journey by Railway: Restricted to A.C first-class fare on the shortest route or amount spent on travel, whichever is lesser.
• The journey undertaken via other modes of transport if the place of origin and destination are not connected by rail.
• The journey undertaken via recognised public transport if the place of origin and destination are neither, completely or partly, connected by rail.
• The journey undertaken if the place of origin and destination are neither, completely or partly, connected by rail nor connected by any recognised public transport

In case of any instances where the employee for the same year could not claim a leave travel allowance, he or she can move it to the next year. However, the claim cannot be part of the Income Tax Return filing . The LTA claim will have to be certified by the employer and added to form 16.

The leave travel allowance is applicable only for two journeys on a block of four calendar years.

Block Year: A block year is a period decided by the Government of India for leave travel allowance exemption purposes. The LTA block for the current period is 2018-21; the previous period was 2014-17.

What is the procedure to claim leave travel allowance?

The employer needs to announce a due date for the allowance to be claimed. Once the date has been announced, the employee may be required to produce original receipts or bills for proof of travel, such as tickets, boarding pass or invoice from the travel agent.

Although proof of travel is not mandatory (depends on the employer), it is always advisable to keep an account of the bills depending on the LTA policy of the organization.

As the name suggests, the allowance provides individuals with an exemption on taxable income. LTA is added to an employees’ salary component based on factors like pay scale, position, title, etc. The employee avails the benefits of the leave travel allowance and only if it is part of the salary structure.

• Leave Travel Allowance
• LTA eligibility

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Leave Travel Allowance (LTA)

What is a leave travel allowance or lta.

LTA or leave travel allowance is a component of the salary that covers travel expenses while an employee is on leave. The employer provides it only for country-wide travel for the employee and family members.

Section 10(5) of the Income Tax Act of India with Rule 2B states that the LTA and other related conditions are exempted from tax. However, it is not available for employees who choose the New Tax Regime .

Consider Rohan, who receives a Leave Travel Allowance (LTA) of ₹20,000 from his employer. However, his actual travel expenses amount to only ₹15,000. In this case, Rohan’s exemption is limited to the actual amount he spent on travel, which is ₹15,000. This exemption applies to expenses directly related to travel, such as transportation costs, and does not cover other expenses like meals or accommodation.

Who is eligible to claim leave travel allowance?

Any salaried individual who has incurred travel expenses while on a planned leave is eligible to claim a leave travel allowance. It can be availed for a minimum of a 3-day leave period while traveling within the country. The reimbursement requires approval of leave from your supervisor beforehand.

The LTA exemption covers the shortest distance between two places. For air travel, the exemption is capped at the economy fare of Air India for the shortest route to the destination and doesn’t apply for foreign travel. It’s applicable for the employee and their family, limited to two children.

What is the latest block period to claim LTA exemption?

The latest block period to claim LTA exemption is 2022 to 2025 which is the 10th block year. The tax exemption can be claimed twice within four years.

Is leave travel allowance taxable?

No, the leave travel allowance is not taxable up to a limit of INR 36,000 (round trip) under the Income Tax Act, of 1961. LTA is an excellent way to save taxes for employees as long as it meets the conditions mentioned in the Act.

Note that, for employees who have chosen the New Tax Regime, leave travel allowance is taxable as per section 115 BAC of the Act (NPTR).

How can employees claim LTA benefits?

To claim benefits, employees must first check with the employer if the LTA component is available in the CTC or the salary slip. The following are the rules for claiming LTA benefits:

• Tax benefits can be claimed after filling out the required application forms and providing supporting travel documents as requested by your employer.
• Employees can claim LTA after completing the return journey of the planned trip.
• Employees must provide documents for proof of travel like travel tickets, GST receipts, etc.
• Employees can submit LTC claims for some family members with proof of travel and for the rest based on certification within the same block if desired.
• If an employee does not undertake any travel, the LTA amount gets included in your salary and becomes taxable according to your income tax slab.

What is the maximum LTA limit?

The maximum LTA limit is granted by the employer.

​​Suppose your employer provides LTA amounting to ₹30,000, and your actual travel expenses sum up to ₹25,000. In this case, you’re eligible to claim exemption only for the ₹25,000 you spent on travel, not for the entire LTA grant of ₹30,000.

Which section of the Income Tax Act allows an exemption for LTA?

Section 10(5) of the Income Tax Act of 1961 allows an exemption for LTA.

Frequently Asked Questions

1. can lta exemption be claimed on every vacation.

No, LTA exemption cannot be claimed on every vacation. It can be claimed only for domestic travel for two trips in a block period of four years.

2. How is the leave travel allowance calculated?

If the employer grants an LTA of ₹40,000, and the employee’s actual travel expenses amount to ₹25,000, only ₹25,000 will be available as an exemption. The remaining ₹15,000 will be included in taxable salary income.

3. Are there any recent updates or amendments to LTA rules?

The only recent update or amendment to LTA rules is that tax exemption cannot be claimed under the New Tax Regime.

4. Can LTA be claimed for travel expenses incurred by family members?

Yes, LTA can be claimed for travel expenses incurred by immediate family members such as spouses, dependent parents, or siblings and up to two children.

5. What happens if an employee does not utilize the full LTA amount in a year?

If an employee does not utilize the full LTA amount in a year, one journey qualified for LTA can be carried forward to the next 4-year block. To claim the unused LTA, the employee must undertake a trip within the first calendar year of the subsequent block.

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