Leave Travel Allowance (LTA): The full form of LTA is Leave Travel Allowance. LTA is one of the best tax-saving tools which an employee can avail. LTA is a tax exemption offered to employees by employers. LTA is an allowance that is paid to the employees by the employer when he/she is traveling. Also, it is be noted that the Leave Travel allowance paid to the employee by the employer is tax-free. This Leave Travel Allowance (LTA) comes under section 10(5) of the Income Tax Act. However, one will have to follow certain rules in order to avail of the LTA tax-free which is explained in detail below. Read on to find out more about how to claim LTA in Income Tax returns.
- What is LTA Exemption?
- Leave Travel Allowance – LTA Rules
- Expenses Exempted Under Leave Travel Allowance
- Leave Travel Allowance – LTA Proofs To Be Provided
- Leave Travel Allowance – LTA Calculation
- How To Claim LTA?
- Leave Travel Allowance Example
- How To Claim LTA Without Travelling?
- LTA Covid Rules
- FAQs on LTA – Leave Travel Allowance
Leave Travel Allowance exemption is only applicable for the employee’s travel cost. Whereas the LTA tax exemption is not applicable for other expenses such as food, shopping, or any other matters. Also, the LTA exemption is also not applicable for more than 2 children.
LTA exemption is valid for two trips in a four-year span. The current block year is between 2018-2021. If one doesn’t use this block, then it can be carried forward to the next block year. For journeys inside India, the LTA tax-free can be claimed for both self and family members.
There are certain rules set by officials to claim the LTA. The list of rules to claim LTA are given below:
- LTA is not applicable for all employees. The LTA is allocated to employees based on various factors such as their Pay Scale, Grade, Position, etc.,
- The employer will allocate a certain amount under LTA and the employee will be able to claim the LTA amount under the specified or allocated money only.
- LTA is applicable for travel within India only.
- The mode of travel can either airways, railways, or recognized public transportation.
- International travels are not covered under LTA.
- LTA can also be claimed if an employee travels alone or with family.
- Leave Travel Allowance is applicable only on ticket fares.
The list of expenses exempted under Leave Travel Allowance is given below:
- Travel by Airways: The airfare via the shortest route or the amount spent, whichever is less, will be exempted.
- Travel by Railways: A.C. first-class fare via the shortest route or the amount spent on travel, whichever is less, would be exempted.
- The source and destination locations of the journey are linked by railways, but the journey is completed by another means of transportation.
- The source and destination locations of the journey are not linked by railways either partially or fully but are connected by an additional public transportation system.
- Source and destination are either not connected by railways or another public transportation system.
Usually, the tax authorities will not ask employers to submit the travel expenses proof while assessing the travel allowance claims. However, the employer has the right to demand the travel expenses proof. Thus it is important for employees to secure the travel expenses proofs to submit the same whenever required. The list of proofs which an employee will have to secure or submit is given below:
- Travel Boarding Pass
- Flight Tickets
- Invoice of Travel Agent
- Duty Pass
- Other relevant documents which an employer might demand for
Any employee will able to claim the Leave Travel Allowance (LTA) for any 2 journeys in a slab of 4 years. This 4 years slab or blocks are designed by the officials of the Income Tax department and completely different from Financial Years (FY). At present, we are in the slab or block of 1st January 2018 to 31st December 2021. Thus any employee will able to claim the Leave Travel Allowance which took place between the year 2018 to 2021.
However, if an employee fails to claim an LTA, then the LTA exemption gets forwarded to the consecutive year but not to the next block or slab. The LTA is applicable only for ticket charges or travel prices. Other expenses such as food, accommodation, or any other liabilities are not covered under LTA.
Is LTA Deducted from Salary? Leave Travel Allowance is not a general part of the employee salary structure. Thus it is important for one to check their salary pay structure before claiming the LTA. Leave Travel Allowance amount varies from one employee to another and thus before applying for LTA, one will have to check with the employer if they are eligible or not.
If you find that you are eligible to claim LTA, then you will have to submit the necessary bills to your employer. Usually, the employer will announce the time frame within which the employee will have to submit the LTA Claims. This process is usually carried out by the admin/HR/accounts team in any office. Despite the above process, the employees are advised to check with their employers or HR team to know, How TO Claim Leave Travel Allowance in ITR since each organization operates the process in different forms.
To understand the LTA, here is an example with the help of which you can understand how Leave Travel allowance is approved to the employee.
Let’s consider an employee named ABC who has provided an LTA of Rs.40,000 by his/her employer under the salary structure. Now ABC has traveled and spends only Rs.35,000 on travel costs. So here the employee exemption is limited to only Rs. 35,000 though the ABC had Rs. 40,000 to spend. Leave Travel Allowance Exemption Limit For Ay 2021 22 is Rs. 35000.
Due to the spread of COVID-19, most people are not in the situation to travel. Thus claiming LTA under these circumstances is highly difficult. To help with this, the officials have come up with certain conditions, where employees will be able to claim LTA without traveling.
- 3x the amount of LTA gained or obtained in the salary structure should be spent.
- Purchases must be made from a licensed GST dealer, and all payments must be made solely through digital channels.
- All the purchase invoices must be sent to the employer.
The frequently asked questions on LTA are given below:
Q. Can I claim LTA without Travelling?
A. Yes, due to the pandemic in the country, the officials have come up with new rules to claim LTA. All the employees will have to meet certain conditions to claim the LTA. You can check how to claim to Leave Travel allowance without traveling from the above section of the article.
Q. Can I claim LTA if I traveled by my own car?
A. No, he/she won’t be able to claim to Leave Travel Allowance if he/she travels by his own car or taxi as the mode of transport.
Q. Can I claim petrol bills in LTA?
A. No, LTA cannot be claimed for Petrol or other expenses expected the travel ticket fare or price.
Now that you are provided with all the necessary information about LTA and we hope this detailed article on Leave Travel Allowance is helpful to you. If you have any queries on this page, ping us through the comment box below and we will get back to you as soon as possible.