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Leave Travel Allowance (LTA) : Eligibility, Conditions for claim and Exemption

shivarajkumar S R , Last updated: 12 February 2024  
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As per Sec 10(5) of Income tax Act 1961, Income not included in the total Income:

In the case of an individual, the value of any travel concession or assistance received by, or due to, him, -

(a) From his employer for himself and his family, in connection with his proceeding on leave to any place in India;

(b) From his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service, subject to conditions as per Rule 2B of Income tax Rules

Meaning of  Leave Travel Allowance (LTA)

LTA stands for Leave Travel Allowance. It is a type of allowance provided by employers to employees as a part of their salary package. LTA is specifically meant for covering travel expenses when an employee and their family travel during a period of leave.

Who is eligible for LTA?

Eligibility for LTA is generally restricted to individuals, specifically employees. An individual can claim LTA to cover travel costs for themselves and their family, including their spouse, children, and wholly or mainly dependent siblings and parents. 

Conditions specified for claiming Leave travel Concessions

  • LTA works with concept of block of 4 years (calendar years)
  • Now the current block is 2022-2025
  • Employee need to travel during his leave period only within India with to and from journey
  • Only 2 journeys can be taken for each block
  • If the employee has not utilized the LTA benefit in the block of 4 years, then only one journey can be carry forward which mandatory to be claimed by employee in the first year of next block only.
  • Proof to be collected like ticket, boarding pass, agent invoice etc.

LTA Exemption Available

  • The LTA exemption is applicable only to actual travel costs, such as air, rail, or bus fare. Expenses like hotel accommodation, and food are not eligible for the exemption.
  • The exemption is limited to the LTA provided by the employer. For example : If the employer grants Rs.35,000 as LTA but the actual cost is Rs.25,000, the exemption applies only to the actual cost, and the remaining Rs.10,000 is considered taxable income.
  • To claim the exemption, an actual journey is a must.
  • LTA exemption is applicable only for domestic travel within India. International travel expenses are not covered.
  • The exemption is available for the employee alone or with their family. 'Family' includes the employee's spouse, children, and wholly or mainly dependent parents, brothers, and sisters.
  • The exemption is not available for more than two children born after October 1, 1998. No restrictions apply to children born before October 1, 1998.

As per Circular No. 8/2013 issued by Central Board of Direct Taxes issued dated 10th October, 2013, this exemption is limited to the actual expenses incurred on the journey which in turn is strictly limited to expenses on air fare, rail fare and bus fare only. No other expenses like local conveyance, sight-seeing expense etc., shall qualify for exemption.

Note:

As the circular and rules specified there, to allow the travel cost limited to Air fare, Rail fare only. The law is restricted to take other charges like local conveyance, sight-seeing expense etc. shall disqualify for exemption.

Amount eligible for LTA Exemption

Part of Fare

Charges not a part of fare

Air Fare

Tax and other charges (Passenger service Fee, User development Fee, Airline Fee)

Rail Fare

Taxes and fee

Bus Fare

Taxes fees and surcharges

Fuel Charges *

Service Charges

 Government  Taxes

Convenience Fee

Booking Fee (BKF)

FAQs

Is there a requirement for an actual journey to claim LTA exemption?

-> Yes, undertaking the actual journey is a prerequisite for claiming LTA exemption. Simply receiving the allowance without travel does not qualify.

Is international travel covered under LTA?

-> No, LTA exemption is only applicable for domestic travel within India. International travel expenses are not covered.

Are there restrictions on the number of children eligible for LTA exemption?

-> Yes, there are restrictions on the number of children eligible for LTA exemption, especially for children born after a certain date.

What is the currect block period to claim LTA exemption?

-> The current block period is from 1 January 2022 until 31 December 2025.


Published by

shivarajkumar S R
(article assisstent)
Category Income Tax   Report

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