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LTA - Basics every employee should know

Leave Travel Allowance (LTA) is granted to employees to meet the cost of travel, while on leave from work, to any place in India. The amount of exemption depends upon the mode of travel. The exemption is allowed only towards the travel fare, and not for boarding and lodging. It is allowed twice in a block of four calendar years. The current block is 2010-13. So, for the period 2010-13 you can claim this exemption for any two occasions.

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What happens if I am not able to claim the LTA in a particular block?

If in a particular block you are not able to claim LTA exemption for one or both journeys, then one journey can be carried forward and can be claimed in the first calendar year of the succeeding block. Thereafter, you can claim the remaining two journeys of that particular block of four years.

Here is an example to clarify this nuance:

Pankaj was not able to perform any travel in the previous block, i.e., during 2006-09. He can carry forward one journey to the current block, i.e., 2010-13 and claim it in 2010, the first calendar year of the block. Thereafter, Pankaj can also claim the remaining two journeys of the block 2010-13. In a way, he will be able to avail three exemptions in the block 2010-13.

Is it mandatory for me to submit travel bills to the employer?

A Supreme Court judgment in 2009 made it clear that the employers do not have a statutory obligation to collect travel bills from their employees to allow the LTA exemption. However, many employers continue to pursue their old habit of requiring employees to submit bills even though it is no longer mandatory.

What if I failed to claim LTA and my employer has deducted tax on the LTA amount?

If you failed to claim LTA and your employer has deducted taxes on the amount paid, you can claim the same in your income tax return. You can accordingly get a refund of the tax that had previously been deducted.

Who all can accompany me on this travel for me to claim LTA?

The travel exemption is available for only the following:

• Your spouse and up to two children
• Your parents and brothers and sisters who are mainly dependent on you

You must be traveling with your family on the journey to claim LTA, otherwise the journey will not be eligible for exemption.

Is the entire holiday cost covered?

No, the entire holiday cost is not covered. Only the cost of to and from travel is eligible. Expenses incurred towards boarding and lodging or on local conveyance to and from the station/airport do not qualify for exemption.

How is the exemption amount calculated? Is there any cap attached?

The travel concession received by the employee is exempt up to the amount spent on travel or the following specified limits, whichever is less:

The above can be summarized in words as the following: If you are traveling by air, then the economy fare on the national carrier on the shortest route is the amount exempt. If you are traveling by any other mode other than air, then if the destination is connected by rail, the first class AC fare by train on the shortest route is exempt. For destinations not connected by rail, where recognized public transport exists the first class or deluxe class fare is exempt or where no recognized public transport exists AC first class rail fare is exempt for equivalent distance.

Comments

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Avinash Barnwal said : 16/03/2010	Sandeep The LTA benefits are not decided by the IT department. It is decided by the Organization, but not sure if that's statutory requirement for the Organization to do so or not.
Avinash Barnwal said : 16/03/2010	Saurabh.. LTA can be tracked down through the ITRs and need when Companies are providing LTA benefits, they need to check previous ITRs for the individual.
Sandeep Narang said : 16/03/2010	Why is that some organizations allow LTA to be claimed by employees while others do not? Is this something that the organization decides or is it decided by the Income Tax department?
Saurabh said : 16/03/2010	I have claimed LTA in 2008 in the duration 2006-2009. Can I claim the LTA 3 times in the next block? Also in one block if a person changes job how is the track maintained of how many times LTA has been claimed?