Leave Travel Allowance (LTA) is an actual expense based allowance provided to an employee for travelling within India during the leave period.
It is also referred to as Leave Travel Concession (LTC).
This allowance can be in form of:
- Reimbursement of Travel Expenses,
- Concession in Ticket Price, or
- Free Ticket
Travel allowance policy differs from one employer to another but the tax law provides a standard rule.
In this article, we will cover the taxation of LTA, its exemption limit and many more.
LTA- Leave Travel Allowance [u/s 10(5)]
A person can get the exemption of travel allowance received from:
- Current Employer for travelling during the leave period, or
- Former Employer after his retirement or termination
This allowance is limited to the actual expenditure incurred for self and family on travel within India.
For a person, an LTA exemption is available for the following family members:
- His Spouse and children (including step and adopted), and
- His Dependent parents, brother and sister
Further, there are various rules which need to fulfil while claiming this allowance.
LTA Rules and Exemption Limit [Rule 2B]
This allowance can be availed for 2 journeys (back and forth) in a block of 4 calendars* years.
|Blocks||4 Calendar Years*|
|Previous Block||2014, 2015, 2016 & 2017|
|Current Block||2018, 2019, 2020 & 2021|
|Next Block||2022, 2023, 2024 & 2025|
LTA used from 1st April 2017 to 31st March 2018 will be allowed as the deduction in the assessment year 2018-19 even if it falls under both current and next block periods.
*Calendar Year starts from January and ends in December.
Carry-over of Unused Leave Travel Allowance
If a person did not use travel allowance (LTA) once or twice during any of the specified 4 years block periods, he can still use 1 (one) unused allowance in the calendar year immediately following that block period.
In this case, the exemption so availed will not be counted for calculating 2 journeys for the next block of 4 calendar years.
Mr.Sonu, a central government employee, was entitled to avail 2 LTA during the calendar year 2014, 2015, 2016 and 2017 [Previous block of 4 yrs].
Suppose he fails to avail both LTA, then he can still use 1 (one) LTA in calendar 2018 i.e Jan 2018 to Dec 2018.
He can still have 2 additional LTA during the calendar year 2018, 2019, 2020 and 2021. [Current Block of 4 yrs]
LTA Exemption Limit and its Calculation
LTA exemption is allowed up to the actual travel fares.
The maximum travel fare which can be claimed as the exemption is given below:
|Journey By||Exemption will be limited to the fare for the shortest route to the place of destination|
|Airlines||Economy fare of Indian Airlines|
|Railways||1st class AC rail fare|
|Any other Transport
to a destination well connected with Rail
|1st class AC rail fare|
|Any other Transport
to a destination NOT connected with Rail
|1st Class AC or deluxe Fare of any Public Transport system, or
1st Class AC Rail fare for the journey’s distance if public transport not available.
Calculation of LTA:
Mr.Raman travels to Pune through Indigo Airlines:
Airfare paid for both way flights – Rs. 12,000/-
Airfare reimbursed by the Employer- Rs.10,000/-
Air Fare for the shortest Route- Rs.8,000/- [wild guess]
Calculate the exempted and taxable LTA.
Exempted LTA: Rs.8,000/- [LTA exemption cannot exceed the economic Airfare for the shortest route]
Taxable LTA: Rs.2,000/- will be taxed as salary Income [10000-8000]
- LTA exemption is also available to foreign employees.
- Travel bill should be saved for future reference.
- The employee should submit those travel bill along with form 12BB
- LTA is only for travel expenses i.e food, sightseeing, hotel or any other expenses on travel are not eligible for exemption.
- LTA can be claimed for a maximum 2 children if born on or after 01st October 1998. In other words, LTA can be claimed for multiple children if they are born before 01-10-1998.
- Childs born as twin or more shall be considered as 1 child if they are born after the birth of person’s 1st
- International travel is not eligible for LTA exemption.
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