Leave Travel Allowance (LTA), also referred to as Leave Travel Concession (LTC), is a tax exemption offered to employed individuals for travel expenses within India. It constitutes a component of the employee’s total cost to the company (CTC) and is commonly paid on an annual basis. What sets LTA apart is its tax-free status under specific conditions under Section 10(5) of the Income Tax Act, 1961.
What is LTA?
– LTA is an allowance given by employers to employees for travel within India. It can be used for vacation travel, travel after retirement, or after termination of service.
– The exemption is allowed twice in a block of four years.
– The current block year for claiming LTA is 2022 to 2025.
LTA exemption is not available if you choose the new tax regime.
Who Can Claim LTA?
– Both private and central government employees qualify for LTA exemption.
– In the private sector, an allowance is typically allocated for leave travel, which employees can use to claim the exemption.
– Government employees receive benefits in the form of trips, which may have additional conditions regarding the number of journeys or the allowed amount per person.
– Only those meeting specific conditions can receive LTA exemption.
Read Also: Understanding Income Tax Rules for FY 2024-25: A Comprehensive Guide for Salaried Employees
Conditions for Claiming LTA:
– The individual must be an employee with an LTA component in their Cost to Company (CTC).
– Actual travel is necessary to claim the exemption.
– Only domestic travel within India is considered for exemption.
– LTA can be claimed for the employee alone or with family members (spouse, children, wholly or mainly dependent parents, brothers, and sisters).
– Exemption is not available for more than two children born after October 1, 1998.
How Much Can You Claim?
– The exemption amount is based on the actual travel cost.
– The journey should be taken through the shortest route to the destination.
– For air travel, the exemption amount will be either the actual travel costs or the cost of an economy class ticket, whichever is lower.
Remember to provide proof of your travel expenses to your employer within specific deadlines to claim LTA. Even if you missed the March 31 deadline, you may still be able to claim LTA within the specified block years. Notably, leave travel allowance is not to be confused with travel allowance/transport allowance which is fully taxable in the case of a normal employee, if he pays taxes in an
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