Valuation of leave travel concession in India [Sec. 10 (50)] - Leave travel assistance provided by an employer to an employee for going anywhere in India along with his family is exempt on the basis of provisions given in the table below. ‘Family’ for this purpose includes spouse and children of the employee. It also includes parents, brothers and sisters of the employee, who are wholly or mainly dependent upon the employee –
Amount of exemption (exemption is available only in respect of fare for going anywhere in India along with family twice in a block of four years)
Where journey is performed by air
Where journey is performed by rail
Where the places of origin of journey and destination are connected by rail and journey is performed by any other mode of transport
Where the places of origin of journey and destination (or part thereof) are not connected by rail
Where a recognized public transport system exists
Where no recognized public transport system exists
Amount of economy class air fare of the national carrier by the shortest route or the amount spent, whichever is less.Amount of air-conditioned first class rail fare by the shortest route or amount spent, whichever is less.
Amount of air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less.
First class or deluxe class fare by the shortest route or the amount spent, whichever is less.
Air-conditioned first class rail fare by the shortest route (as if the journey had been performed by the rail) or the amount actually spent, whichever is less.
OTHER POINTS – One should also keep in view the following points –
Only two journeys in a block of 4 years are exempt – Exemption on the aforesaid basis is available in respect of two journeys performed in a block of four calendar years. The different blocks are –
a. 2006-2009 (i.e., January 1, 2006 December 31, 2009);
b. 2010-2013 (i.e., January 1, 2010 to December 31, 2013).
“Carry-over” concession– If an assessee has not availed travel concession or assistance during any of the specified four-year block periods on one of the two permitted occasions (or on both occasions), exemption can be claimed in the first calendar year of the next block (but in respect of only one journey). This is known as “carry over” concession. In such case the exemption so availed will not be counted for the purpose of claiming the future exemptions allowable in respect of two journeys in the subsequent block.
Provision illustrated – For the block 2006-09, Mr. Ram can claim exemption in respect of leave travel concession under section 10(5) on two occasions. If he has availed the exemption only on one occasion (or he has not availed the exemption at all) during 2006-09, then he can take the benefit of “carry over” concession. The benefit of carryover is available only in respect of one journey provided he avails leave travel concession exemption under section 10(5) in the first calendar year of the next black (i.e., during the calendar year 2010). In addition, he can avail exemption on two more occasions during 2012-13.
Exemption is based upon actual expenditure– The quantum of exemption is limited to the actual expenses incurred on the journey. In other words, without performing any journey and incurring expenses thereon, no exemption can be claimed.
Exemption is available in respect of fare – The exemption is strictly limited to expenses on air fare, rail fare, and bus fare only. No other expenses, like scooter or taxi charges at both ends, during the journey and lodging/boarding expenses are qualified for exemption.
Exemption is available in respect of shortest route – Where the journey is performed by a circuitous route; the exemption is limited to what is admissibly by the shortest route. Likewise where the journey is performed in a circular from touching different places, the exemption will be limited to what is admissibly for the journey from the place of origin to the farthest point reached, by the shortest route.
Fare of more than 2 children – Not eligible for exemption – The exemption stated in column two above shall not be available to more than 2 surviving children of an individual after October 1, 1998. However, this restriction does not apply in respect of children born before October 1, 1998 and also in respect of multiple births after on child. In other words, in respect of journeys performed on or before October 1, 1998, the exemption will be admissibly in respect of all surviving children of an individual. But in respect of journeys performed after October 1, 1998 –
a. The exemption will be admissibly to all surviving children born before October 1, 1998;
b. In addition, the exemption will be admissibly to only surviving children born on or after October 1, 1998 (in reckoning this limit of two children, children born out of multiple births after the first child will be treated as ‘one child only’).