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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

Conditions specified for claiming Leave travel Concessions

  • LTA works with concept of block of 4 years (calendar years)
  • Now the current block is 2014-2017
  • 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.

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.


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)

*Some of the Air line tickets are just showing  base fare and fuel charges separately  for the purpose of giving  less discount  to  passengers  on the base fare, but  in actual scenario fuel charges are part of base fare.







Base Fare




Service Tax*


*(ST Allowed  upto 5.6% on Base fare)


Passenger Service/Development Fee




User Development Fee




Other Development Fee




Service Charges and Taxes




Convenience Fee



Total Fare



Allowed amount (1+2)



Disallowed (3+4+5+6+7)




As per the interpretation of the Law the word used is “fare” and restricted to Only Fare. By considering general practice and having constructive opinion taxes paid only part of the fare, being mandatory charges by Government in compliance with Rules.

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Category Income Tax, Other Articles by - shivarajkumar S R