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Tax Tips - Tell me..."Do I get any tax benefits from Leave Travel Allowance?"

As we approach the end of the financial year, many of us are busy arranging for travel bills to be submitted to our employer in order to claim Leave Travel Allowance (LTA) exemption and some of us are even planning a vacation. Let's see how LTA exemption is calculated by employers.

Leave Travel Allowance is granted to employees to meet cost of travel on leave to any place in India. For LTA it is essential that:

• You've taken leave from the office
• The travel is performed to any place in India

The exemption is allowed only in respect of the fare. Expenses incurred towards boarding and lodging or on conveyance to and from the railway station/airport do not qualify for exemption.

You can claim LTA exemption twice in a block of four calendar years. The current block is 2006-09. Thus, during the period 2006-09 you can claim this exemption for any two years.

Well, the good news is that if in a particular block you are not able to claim LTA exemption for both journeys or for one journey, 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. Lets understand this using an example.

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

Any one you like to take along but travel exemption shall be available only in respect of following:

• Your spouse and up to two children
• Parents, brothers and sisters mainly dependent on you.

Travel concession received by employee shall be exempt to the extent amount spent on travel or the following specified limits, whichever is less:

If above table is too technical let's try and understand with the help of following flow chart:

According to the LTA rules, international travel is not covered.

In the case where you take a travel package, your itinerary might be such it covers two Indian destinations among some international destinations as well. Here the claim can be submitted for the two Indian destinations en route. LTA shall be allowed according to the air fair charged by national carrier on the shortest route between the two Indian destinations.

For example, you might be offered the following routing for a trip to Bangkok: Delhi - Colombo - Bangkok - Colombo - Trivandrum - Delhi

The claim can be submitted for the Delhi - Trivandrum - Delhi sector, which shall be allowed to the extent of economy class air fair charged by national carrier by shortest route.

In a recent judgment dated 21st January, 2009, the Supreme Court of India pronounced that the employers are under no statutory obligation to collect travel bills from the employees to allow LTA exemption. However, to be on the safer side most employers are still following traditional method of collecting travel bills to allow LTA exemption.

If you failed to claim LTA from your employer and your employer has deducted taxes on the amount paid, you can claim the same in your ITR and accordingly you shall get a refund of tax deducted.

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Amar Bahadur Singh said : 15/09/2010	For claiming LTA exemption employee should be the part of Journey.