SBI Bank employee-ITR-2

This query is : Resolved

Murali (Querist)
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13 August 2025 My brother is working at SBI and his gross salary is ₹34.8 lakhs, which includes perquisites of ₹6.09 lakhs and Leave Travel Allowance (LTA) of ₹6.52 lakhs. His consultant advised him to file his return using ITR-2, as he has a short-term capital loss of around ₹3,000. He filed the return under the new tax regime. However, he claimed the entire LTA amount of ₹6.52 lakhs as exempt under Section 10(5). Is this claim acceptable, and will he need to provide any evidence if he receives a notice

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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13 August 2025 ✅ 1. ITR Form Selection – ITR-2
Your brother correctly used ITR-2 because:
He has salary income, perquisites, and short-term capital loss.
ITR-1 is not applicable when there's capital gains/loss or income above ₹50 lakhs.
ITR-3 is not needed unless he has business/professional income.
So ITR-2 is appropriate.
✅ 2. LTA (Leave Travel Allowance) – Section 10(5)
Claiming ₹6.52 lakhs as fully exempt under Section 10(5) is not acceptable, unless:
The travel was undertaken within India,
The exemption claimed is only for the actual eligible travel cost (rail/air/bus),
The exemption does not include food, hotel, or local conveyance,
It's claimed only for self and specified family members,
The claim is within the block period and two journeys per block rule,
And he has actual supporting bills for the travel costs.
💡 Important: LTA exemption is not automatic — it's limited to the eligible amount, not the full LTA received.
🚫 Problem in this Case:
Claiming the entire LTA amount (₹6.52 lakhs) as fully exempt under Section 10(5) is highly unusual and likely excessive, unless there's a family of 8 flying business class multiple times — which is rarely justifiable.
This will likely trigger a notice or scrutiny under CASS (Computer Aided Scrutiny Selection).
📄 3. Documentation Required (If Notice is Received)
If your brother receives a notice under 143(1), 139(9), or 142(1), he should be ready to produce:
Travel tickets (flight/train/bus)
Boarding passes (if air travel)
Leave application/approval
Proof of travel undertaken (for family, if claimed)
Invoice/bill clearly showing fare breakup (only fare is allowed)
✅ What to Do Now?
Amend the return (revise ITR) if the LTA claim was mistakenly made in full — and instead, claim only the actual eligible amount.
Else, be prepared with supporting documentation, in case a notice is issued.
If revised, do it before 31st December 2025 (for AY 2025-26), and clearly show only eligible LTA as exempt.

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