Leave Travel Allowance
Leave Travel Allowance/Concession (LTA/LTC) is a monetary benefit that an employee gets from his employer for proceeding on leave to any place in India. LTA is exempt from tax, subject to certain conditions:
- The employee should take leave from his company
- S/he should actually travel
- The necessary travel documents must be submitted as proof that the travel has taken place
In order to claim the LTA benefit, you can travel alone or with your family. But your family cannot travel without you. “Family” includes your spouse, children, your dependent parents; and brothers and sisters (again, no limit specified), provided they are mainly dependent on you. It is not necessary for you to declare your dependent family members at the time of joining the company and neither does it depend on any specific company policies.
Below is a table that gives the amount of LTA you can receive depending upon your mode of travel:
Mode of Journey Amount of Fare you Receive
- By Air : Economy class national carrier via shortest route.
- By Railways: AC 1st Class Fare via shortest route.
- By any other mode of Transport: If recognized public transport exists, then the 1st Class Deluxe fare; else an amount equivalent to the AC 1st Class Rail fare.
Note that accommodation, food, sightseeing, airport/rail transfers etc. are not covered under the LTA scheme. Only the above-mentioned transport cost is covered for exemption.
Important: LTA exemption is available only for journeys undertaken within India.
There are 2 ways you can receive the LTA benefit:
1. Monthly salary:
Here, the allowance is credited to you along with other components of your salary whether or not you actually take leave and travel. To save tax on that amount, you need to submit documentary proof of travel undertaken while on leave failing which, your LTA for the whole year will be taxed.
Here, you first travel while on leave and preserve relevant documents. You need to submit them once you return. Your employer will them reimburse the applicable amount in the next payment cycle or as per company rules.
LTA can be claimed only twice in a block of 4 calendar years. These blocks are fixed by the government. The present blocks are 2010-2013 (i.e. January 1, 2010 to December 31, 2013). If the employee fails to avail the exemption in a particular block, he can avail the same in the next block of four years, as a “carry over” option. But he should avail of one in the first year of the next block. Also, you cannot claim more than one LTA benefit in a calendar year. Interestingly, you can claim LTA exemption from your previous employer too, if you have not utilized the benefit there (so long as it is claimed within the same block of 4 years).
Important Points on Leave Travel Allowance :
1. You can get LTA only if you have applied for leave from your company and have actually traveled. However, international travel is not valid. You must have traveled within the country. You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.
2. The entire cost of the holiday is not covered. Only the travel costs are covered. So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.
3. If you travel by car and it is owned by a central government organization like ITDC, the state government or the local body, then LTA is permitted. If you could not get public transport and resorted to private transport like renting a car, get a bill issued by the rental company. If your employer does not accept the bill, you can always file an income tax return, claim an exemption and get a refund.
4. LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children. For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets). If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.
5. LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31). The current block is 2010-13 — January 2010 to December 2013. The earlier one was from 2006-09 — January 2006 to December 2009. During this time period, a person is entitled to two LTA claims.
6. Though you can claim two journeys in a block of four years, you can claim the LTA benefit just once in a year. You cannot claim both the journeys in one year. So, while a person can get an income tax exemption for two journeys in a block of four calendar years, he can make a trip only once a year. If you make two trips in a year, you lose one. One-way out is to claim one and make your spouse claim the other.
7. You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block. Let’s say you do not take your LTA in 2010-13. Or that you use only one LTA. Don’t worry, you will be able to take the pending LTA in 2014. This means that, in the 2014-17 block, you will be totally entitled to the three journeys.
8. If you switch jobs, you can get the LTA not only from your present organization but also from your former employer, if the concession is lying unutilized. Let’s say that, in the 2006-09 block, you claimed LTA in 2007. In 2008, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.
9. You must take the shortest route to your destination to be eligible for LTA. Let’s say you are going from Delhi to Mumbai on a holiday. So the cost of your travel from Delhi to Mumbai and Mumbai to Delhi will be eligible for LTA.
10. If your LTA is not utilised, it gets added to your salary and you will be taxed on it. Let’s say you and your spouse are both employed and both have LTA as part of the salary package. Your LTA is Rs 20,000 and hers is Rs 20,000 too. Both of you and your child go for a holiday. The tickets for the three of you amount to Rs 15,000. You supply the tickets to your office and this amount will be eligible for a tax deduction; the balance Rs 5,000 will be taxed. You can claim exemption only to the tune of your expenditure. If you claim this, your spouse will not be able to claim this same holiday from her employer. His/ Her Rs 20,000 will be taxed. Unless, of course, you go for another holiday and he/ she claims it. Or, let’s say, you spend Rs 30,000 on tickets but your LTA is just Rs 20,000. You can claim up to Rs 20,000 and tell your spouse to claim his/ her ticket from his/ her employer.