Leave Travel Allowance in Salary: Claim Rule, Eligibility, Tax Exemptions
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Are you longing for a much-needed getaway while also trying to figure out how to reduce your tax burden? Look nowhere else! Your travel wishes can come true with LTA, also referred to as Leave Travel Allowance. Employers provide their staff with this wonderful tax benefit, which enables them to pay less in taxes for domestic travel expenses. Excited? Let’s delve into the LTA world, how it functions, and the laws that control it. So without waiting further, let’s dive in!
What is LTA in Salary?
Leave Travel Allowance (LTA) is a special allowance provided by employers to their employees when they take leave to cover their travel expenses. It’s a significant component of your salary as it qualifies for income tax exemption under the Income Tax Act of 1961. According to Section 10(5) of the Income Tax Act, the LTA received by you won’t be considered as part of your taxable income for the year.
What Is the Eligibility for LTA?
To avail of the LTA exemption, you can claim it only for the actual travel costs like airfare, rail fare, or bus fare incurred during your journey. However, expenses for local conveyance, sightseeing, accommodation, and food are not eligible for this exemption. Keep in mind that the exemption is limited to the LTA provided by your employer.
For instance, if your employer grants you an LTA of Rs. 30,000, but you actually spend Rs. 20,000 on eligible travel costs, the exemption will be applicable only to the extent of Rs. 20,000. The remaining Rs. 10,000 would be included in your taxable salary income.
How to Claim LTA?
To claim your Leave Travel Allowance, there are some important conditions to meet:
- The actual journey is a must to claim the exemption.
- The exemption is applicable only for domestic travel within India; no international trips are covered.
- You can claim the exemption for yourself or with your family. ‘Family’ includes your spouse, children, and wholly or mainly dependent parents, brothers, and sisters.
- However, the exemption is not available for more than two children born after 1 October 1998. Children born before that date have no such restrictions. Additionally, this restriction does not apply to cases of multiple births on a second occasion after having one child.
Documents Required to Claim LTA
To claim your Leave Travel Allowance, you’ll need to provide proof of travel, such as:
- Flight/Train tickets
- Boarding passes
- Duty passes
- Bills from travel agents
- Any other documents required by your employer or evaluating officer.
LTA Exemption
|
No |
Scenario |
Eligible Exemption |
|
1 |
Travel between non-connected journeys and destinations by recognized public transport |
Reimbursement is equivalent to air-conditioned first-class rail fare for the shortest route as if taken by train. |
|
2 |
Travel between non-connected journeys and destinations, with partial/full rail connection | Reimbursement is restricted to 1st class or deluxe-class fare for the shortest route to the destination. |
|
3 |
Travel between journey and destination connected by rail |
Reimbursement for any other mode of transport, limited to air-conditioned first-class rail fare for the shortest route to the destination. |
|
4 |
Air travel between journey and destination |
Reimbursement is limited to the air economy fare of the national carrier (for example Air India) for the shortest route to the destination. |
How to Calculate LTA in Salary?
Computing your Leave Travel Allowance is easy! The LTA is exempted up to a certain limit while calculating your income from salaries. The outstanding balance will be subject to taxation based on your applicable Income Tax bracket.
For example, if you received an LTA of ₹6,500 and you spent ₹5,500 on eligible travel expenses, you can claim an exemption of ₹5,500. The remaining ₹1,000 would be added to your taxable salary.
What Are the Restrictions on Leave Travel Allowance?
There are some conditions under which tax exemption is not available for Leave Travel Allowance:
- LTA doesn’t cover food expenses incurred during travel.
- International travel is not eligible for exemption.
- Salaried employees with more than two children born after October 1, 1998, cannot avail of the exemption.
- You cannot claim LTA more than twice in a block of 4 years.
Note: If you haven’t claimed LTA in a specific block year, you can carry it forward to the next block and use it in the first year of the next block.
FAQs
-
What is the Leave Travel Allowance (LTA) percentage in salary?
The LTA percentage is determined based on your salary package or the cost to the company. Typically, it falls within the range of up to 15% of your taxable income.
-
Is the LTA amount included in my take-home salary?
As LTA is a part of your overall salary structure, most employers usually include it in your take-home salary. However, it’s advisable to reach out to your HR department for a more precise clarification.
-
How can I claim LTA for a multi-destination journey?
When undertaking a journey with multiple destinations, you can claim the tax exemption only for eligible expenses incurred on the shortest route available from your place of origin to the farthest point of your journey.
Now that you’ve understood the ins and outs of leave travel allowance, get ready to enjoy the benefits it offers! Just remember, this allowance may not be applicable if you choose to follow the new tax regime. Happy travels!
