A tricky journey – Claiming Leave Travel Concession in India

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Leave Travel Concession (LTA)

Leave Travel Concession is one of the most popular but tricky benefits available to employees in claiming exemptions under taxable salary income

Valuation of LTA Exemption The amount exempt under Section 10(5) of the Income-tax Act is the value of any travel concession or assistance received or due to the assessee:

  • from his employer for himself and his family with his proceeding on leave to any place in India
  • 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 termination of his service.

Family, in relation to an individual means –

  • the spouse and children of the individual (exemption available only in respect of two children born after 1st October 1998, no restriction on the number of children born before 1st October 1998)
  • the parents, brothers and sisters of the individual who is wholly or mainly dependent on him

Block Period and restrictions on the number of Journeys – Only 2 journeys in a block of 4 years is exempt. The exemption is available in respect of 2 journeys performed in a block of 4 calendar years commencing from 1986. The latest block is:

  • 2006-2009 (i.e., January 1, 2006, to December 31, 2009)
  • 2010-2013 (i.e., January 1, 2010, to December 31, 2013)
  • 2014-2017 (i.e., January 1, 2014, to December 31, 2017)

Carry-over concession – If an employee 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), the 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 a case, the exemption so availed will not be counted for the purpose of claiming the future exemptions allowable in respect of 2 journeys in the subsequent block.

For example, the employee has not availed LTA benefit at least once in the block of 2006-2009, he can claim the carry-over concession in the calendar year 2010. If he claims the LTA benefit in 2010, this will not be counted for the purpose of exemptions in the block 2010-2013. i.e., the employee can claim LTA on 2 journeys performed in 2010-2013 irrespective of whether he claimed the carryover benefit in 2010 for the block of 2006-2009.

The quantum of exemption – it is limited to the actual expenses incurred on the journey. The exemption is strictly limited to expenses on airfare, rail fare, bus fare only. No other expenses, like scooter charges at both-ends, porterage expenses during the journey and lodging/boarding expenses will qualify for the exemption. Click Here Resolve Leave

Circuitous Route – Where the journey is performed by a circuitous route, the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption will be limited to what is admissible for the journey from the place of origin to the farthest point reached, by the shortest route.

Conditions for Exemption – The exemption is subject to the following conditions (as per Rule 2B)

Different situations Amount of exemption
Where Journey is performed by air Amount of air economy fare of the National Carrier by the shortest route or the amount spent, whichever is less.
Where Journey is performed by air Amount of air economy fare of the National Carrier by the shortest route or the amount spent, whichever is less.
Where Journey is performed by rail Amount of air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less
Where the places of origin of journey and destination are connected by rail and journey is performed by any other mode of transport Amount of air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less
  • Where are places of origin of journey and destination (or part thereof) are not connected by rail
  • Where a recognized public transport exists
  • Where no recognized public transport system exists
  • 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 rail) or the amount actually spent, whichever is less

Other important points to note

  • LTA cannot be claimed for travel performed before joining the company
  • LTA cannot be claimed for foreign travel
  • If husband and wife both are working, they cannot claim LTA for the same trip as a common expense cannot be eligible for double reimbursement. They should plan the trips in such a way that both put together can claim LTA benefit for 4 trips in a block of 4 years
  • The employee must accompany with family for claiming LTA. Trips by family alone cannot be allowed.
  • Trips are performed using cars owned by Govt. agencies such as ITDC, KSTDC or any local bodies are allowed. Else, the air-conditioned first class rail fare by the shortest route, as if the journey is performed by rail or the amount actually spent, whichever is lower is allowed.
  • There is no maximum limit on claiming LTA provided it is incurred on travel within India and for self and family members. However, generally, companies in their HR policies specify the maximum limit
  • Proof of travel is not required to be provided to the employer as per recent Supreme Court decision
  • LTA can be performed on holidays or on leave days or any combination of both. However, few companies specify the minimum number of leaves to be taken for claiming LTA, in order to discourage fictitious claims.
  • If the employer for any reason disallows the LTA claim, the employee can claim it at the time of filing IT returns, but he/she needs to produce the relevant documents of expenses incurred to income tax officer at the time of assessment. Also read Govt to judge: Clarify view on LTC

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