Quick Summary
- Leave Travel Allowance (LTA) is an allowance provided to employees for personal outstation travel within India.
- It helps lower tax liability and can be claimed twice in a block of four years.
- LTA covers travel expenses for the employee or their family, including spouses, children, dependent parents, and siblings.
- It can be claimed for air or train travel, following the shortest route, and requires submission of travel proof to the employer.
- LTA is tax-free up to a certain limit and must be claimed during periods of leave.
Table of Contents
Have you been planning a family vacation and considering how to avail of Leave Travel Allowance? Not to worry, we are here to tell you all about Leave Travel Allowance. Not only what it is but also how it can be easily claimed.
Leave Travel Allowance (LTA) is an allowance that is provided to an employee for personal outstation travel. The allowance can only be used for travelling within India and not outside. It is a great way for you to lower your tax liability.
You can claim two journeys in four years. The exemption is only applicable to the employee or their family. Moreover, your salary structure determines the Leave Travel Allowance limit.
What is Leave Travel Allowance?
Definition of LTA
If you ask what Leave Travel Allowance means, let’s answer it in simple terms. Employees are eligible for LTA as part of their cost-to-company (CTC) and can claim reimbursements spent on travel.
Purpose of LTA
It is a way for companies to give you some paid time off with your family. But it also helps you with leave travel allowance income tax exemption. It comes under section 10 (5) of the Income Tax Act.
Now, if one asks who is considered family under LTA rules, it includes spouses and children, dependent parents, and dependent siblings.
Types of Expenses Covered Under LTA
The LTA only includes travel expenses and doesn’t include food or stay expenses. Moreover, according to LTA claim rules, it is only for domestic travel
Most importantly, it cannot be claimed in every financial year. The LTA exemption for travel is only for the employee or his family. Only expenses for two children are included in the LTA, according to a report.
Criteria to Claim LTA
Leave Eligibility
The Leave Travel Allowance can only be availed if the employee is on leave from work.
Mode of Travel
The Leave Travel Allowance includes travel modes like air and train. You need to choose the tickets wisely. The LTA exemption is mostly for the shortest route to the destination. The following travel modes you can opt for:
Travel by Air: You can claim either for the shortest route or the actual expenditure, whichever comes out to be less for tax exemption.
Travel by Train: One can opt for First Class AC by the shortest route or the actual amount. Again, whichever comes out to be lower for tax exemption.
If the destination is not connected by train or air, this is the amount one can claim. You can get first-class AC or deluxe-class fare for the shortest route.
Destination Criteria
As mentioned above, the destination can be any place within India. International travel cannot be claimed under the LTA rules. You can travel by air, train or any other mode of transport which reaches the destination.
What if it is a multi-destination journey? It can be claimed for the travel from the place of origin to the farthest point for the shortest route.
Claim Timeline
How to calculate leave travel allowance? It can be only claimed in a block of four years. A block year is unlike a financial year. The current block year that is going on is 2022-2025. An employee can claim two LTAs during this period of four years.
The right time to opt for an LTA is when you can maximize tax savings. If you couldn’t claim during that block, this is what to do. It can be carried forward to the first year of the subsequent block year.
Preferably claim an LTA where you had higher expenses. If one does not claim LTA, the employer adds the leave travel allowance to the salary itself.
How to Claim LTA
Required Documents for LTA Claim
If you are wondering how to claim LTA, find below all the details you need.
First, make sure to keep all the travel agent’s invoices, travel tickets, and other travel proof. Submit the documents according to the employer’s leave travel allowance bill format.
The taxation of LTA in the case of central government employees and the private sector is different. For government employees, LTA is not part of the salary structure of an employee. For private sector employees, it is part of the CTC.
It becomes non-taxable in the year the employee submits the bills to the employer.
Procedure to Claim LTA
The procedure to claim Leave Travel Allowance is very employer-specific. They announce the due date within which employees can make the claim.
It is not mandatory to collect proof of travel. However, it is always advisable to have copies of the travel proof.
Also Read: 20 Ways to Get Paid to Travel: Online Jobs for You While You Travel
LTA in Brief
Now, you know what is Leave Travel Allowance. It is the paid time off that an employer provides his employees. But that’s not all. Leave Travel Allowance income tax benefits are something that everyone enjoys.
However, the LTA rules for tax exemption are very specific. When it comes to modes of travel, you can opt for a mode that takes the shortest route. The destination needs to be within India.
The Leave Travel Allowance limit depends on your CTC. An employee can claim the LTA by using the travel proof and submitting it on time.
The best time to avail of LTA is when you have high expenses. Also, it will lead to the highest tax exemptions.
LTA can be claimed twice in four years which is called a block. The current block is 2022-2025. If you cannot avail in this block then it will get carried forward to the next one.
In short, Leave Travel Allowance is a privilege for an employee for all the hard work. So who wouldn’t like to enjoy it?
Want to explore helpful techniques to save and grow your hard-earned money? Dive into our guide on Budgeting.
Frequently Asked Questions (FAQs)
Can LTA be claimed every year?
Leave Travel Allowance cannot be claimed every year. According to LTA rules, it can be claimed twice in four years. Also, there are terms and conditions on what sort of travel is allowed.
It needs to be domestic travel and LTA only pays for the travel. Food and other expenses are not part of the reimbursement. So, one needs to make sure to avail of LTA when there are high expenses.
What is the period to claim LTA?
LTA can be claimed only twice in a four-year block. The claim is specific to travel expenses incurred by the employee or his family which includes spouse, two children, dependent parents, or dependent siblings.
The travel does not include food or other expenses. The employee can opt for different modes of travel, whichever has the shortest route or is of lower cost.
Is LTA taxable?
The amount received for LTA is tax-free up to a certain amount. It comes under Section 10 (5) of the Income Tax Act. It means you can deduct LTA as an exemption from your income.
So, to make it tax-free there are certain LTA rules that you need to follow. The modes of travel you opt for must be the shortest route. Also, the LTA must be availed when you are on leave.
What is the exemption limit for LTA?
The tax exemption limit depends on the amount that the employer has provided.
For example, if an employer has been given an LTA of Rs. 30,000 and the actual travel cost came up to be Rs. 25,000. Then, the employee will be exempted from Rs. 25,000 but the rest of Rs. 5000 will be part of the taxable salary income.
In brief, whatever part of LTA is not spent on travel, will eventually be taxed.
What are the conditions for availing of LTA tax exemption?
The conditions to avail of tax exemption are the following:
1. According to leave travel allowance income tax rules, travel must be domestic.
2. If a person opts for travel or air as a mode of transport, it should be the shortest route. Otherwise, the travel amount spent must be less.
3. The LTA can opt only for a time when the employee is on leave.
4. LTA can be used for an employee or his family.
Who is included in the travel cost claimed for a tax break under LTA?
Under LTA rules, family includes spouses, children, dependent parents, and dependent siblings are included in the travel cost claimed for a tax break.
How can I claim LTA in case of a multi-destination journey?
In the case of the multi-destination journey, LTA can be claimed for the travel from the place of origin to the farthest point for the shortest route.
Is it necessary to submit travel cost bills to the employer?
It’s not mandatory to submit travel cost bills to the employer, it’s advisable to keep copies of travel proof as documentation for claiming LTA.
Can LTA exemption be claimed on every vacation?
No, LTA exemption cannot be claimed on every vacation. There are rules and limitations regarding the frequency and eligibility for claiming LTA.
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