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June 12, 2021

How much you can claim Leave Travel Allowance for FY 2021-22

by Mahesh Mara in Income Tax

How much you can claim Leave Travel Allowance for FY 2021-22

Leave Travel Concession is an exemption for allowance/assistance received by the employee from his employer for travelling on leave. The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTA provided by the employer. For instance, if LTA granted by employer is Rs. 25,000 and actual eligible travel cost incurred by employee is Rs. 15,000, exemption is available only to the extent of Rs. 15,000 and balance Rs. 10,000 would be included in taxable salary income. In this article we will learn about provision related to leave travel allowance.

What is the amount of exemption available under Leave Travel Allowance?

Where the journey is performed after 01.10.1997 the amount of LTC is exempted under section 10(5) shall not be more than the value of LTC received or Actual Amount spend on travel subject to certain conditions:

1. Air Travel

Amount not exceeding the air economy fair of national carrier by the shortest available route to the place from destination.

2. Any other mode

i.) When rail service is available: Amount not exceeding the air-conditioned first-class rail fair by shortest route.

ii.) When rail service is not available:

a) A recognised public transport facility exist: Amount not Exceeding the first or deluxe class fair of such transport.

b) No recognised public transport facility exist: Amount equal to first class railway fair available by shortest route.

What are the conditions for claiming exemption of LTA?

The following are the conditions for claiming Leave Travel Allowance:

  • Actual journey is a must to claim the exemption
  • Only domestic travel is considered for exemption i.e., travel within India. No international travel is covered under LTA
  • The exemption for travel is available for the employee alone or with his family, where ‘family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee. Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restriction. Further, in cases of multiples births on second occasion after having one child is also not affected by this restriction.
  • Under Rule 2B, exemption will be available only in respect of two Journeys in block of four calendar years.
  • The Concession is not available to an employee who has exercised an option to pay income tax under new income tax / concessional tax regime.
  • Cash equivalent of full leave encashment will be allowed, provided the employee spends an equal sum.

Note:

A block year is different from a financial year and is decided by the Government for LTA exemption purposes. It comprises of 4 years each. The very first 4-year block commenced from 1986. List of block years are 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. The previous block was the calendar year 2018-21. The block applicable for the current period is the calendar year 2022-25.

What is the procedure to claim Leave Travel Allowance?

Procedure to claim Leave Travel Allowance is normally company specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc. along with the mandatory declaration. Though it is not mandatory for the company to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit to employer based on LTA policy of the company/to tax authorities on demand.

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