Travelling in holidays is the cost of money. However, if you are a salaried employee, you can use the same vacation to save on tax outgo. Most of the organisations allow employees Leave Travel Allowance (LTA) as part of the salary package. LTA is exempt from tax, subject to conditions and limits. Though LTA is quite simple, it often brings about a lot of questions about claiming exemption on it.
Leave Travel Allowance Exemption
LTA is an allowance that an employee gets from his employer when Employee travels in the country with the family or alone. This Leave Travel Allowance( Tax Free) can be claimed when an employee goes on a vacation and submits the actual bills to the company. In some cases, this amount is also referred to as Leave Travel Concession (LTC). A self-employed person or business person cannot pay himself LTA. Different employers offer different amounts as LTA depending on the position at the employee is working. At the time of filing IT return, the amount received as Leave Travel Allowance is exempted to tax under head Salaries.
As per the [Section 10(5)], Rule 2B of the Income Tax Act, 1961, LTA is entirely exempted. The LTA amount received by an employee from his employer for himself or his family. This exemption is only allowed if the amount received is about
- Leave to any place within India.
- Any place within India after the termination of his service after retirement from service.
The following amount is allowed to be claimed as LTA exemption.
Can we claim LTA exemption?
The assessee can claim exemption in respect of any two journies in a block of four years. The Income Tax Department has created the block of four years each & in each block, the exemption can be claimed twice.
The block of years during which exemption can be claimed twice are:-
|S.no||Block No||LTA Block Year|
In case, an assessee has claimed only one exemption in a particular block or has not been able to claim both the waiver. The can carry forward the exemption of 1 journey to the next year. Please note that he can carry forward the exemption of 1 travel only to the next year and not to the next block. For, e.g., If an assessee has only claimed a single exemption in the 7th Block i.e. 2010-13, he can carry forward this exemption to the next year i.e. 2014 and can apply for this exemption only in the year 2014. The original two exemptions for 2014-17 would also continue to be there.
Processing of Travel Allowance Bills
- The Travel Allowance claims are submitted immediately after the completion of the journey.
- If Advance has been drawn, the maximum time limit is 15 days from the end of the journey.
- Approval of tour is taken in advance in general, especially in such case whether the higher mode of transport is to be availed.
- Boarding passes, tickets for travel by rail or bus are enclosed.
- Countersignature of HOD or RD is obtained.
- Details of advance, free lodging or boarding, local travel are explicitly stated.
- Verification of Vouchers/ enclosures by the claimant is done.
- All voucher(s) are enclosed for which money is being claimed.
About Section 10(5)
As per “Section 10(5) for an individual, assistance received by, or due the value of any travel concession is obtained by the following cases.
- From his Company (employer) for himself and his family, in connection with his proceeding on leave to any place within India.
- From his former employer or company (employer) for himself and his family, in connection with his proceeding to any place within India after the termination of his service, or after retirement from service.
subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :
Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.
Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—
(i) the spouse and children of the individual ; and
(ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual; ]”.