Apart from income tax premiums, housing loan interests, etc. the Income Tax Act, 1961 provides salaried employees tax exemptions on other variables as well. These exemptions allow employers to structure employee CTC in an efficient manner that is beneficial to both parties and is tax efficient. A leave travel allowance or LTA Is one such exemption. However, do keep in mind that if this exemption can only be availed if you stick to the old tax regime.
A leave travel allowance is an exemption for compensation or assistance provided by an employer to an employee while he/she travels on leave. This allowance acts as a tax exemption to the salaried employee.
There are a few factors that will be taken into consideration before an employees’ LTA claim can be taken into account.
Under what conditions can an employee claim leave travel allowance?
Mr X is provided LTA of INR 15,000 by his employer, but X spends only INR 5,000 on travel, then his exemption is limited to only INR 5,000 since the exemption is only valid for travel expenses and not other costs such as accommodation and food.
The following are a list of expenses that are eligible to be exempted under LTA or leave travel allowance:
In case of any instances where the employee for the same year could not claim a leave travel allowance, he or she can move it to the next year. However, the claim cannot be part of the Income Tax Return filing. The LTA claim will have to be certified by the employer and added to form 16.
The leave travel allowance is applicable only for two journeys on a block of four calendar years.
Block Year:
A block year is a period decided by the Government of India for leave travel allowance exemption purposes. The LTA block for the current period is 2018-21; the previous period was 2014-17.
The employer needs to announce a due date for the allowance to be claimed. Once the date has been announced, the employee may be required to produce original receipts or bills for proof of travel, such as tickets, boarding pass or invoice from the travel agent.
Although proof of travel is not mandatory (depends on the employer), it is always advisable to keep an account of the bills depending on the LTA policy of the organization.
As the name suggests, the allowance provides individuals with an exemption on taxable income. LTA is added to an employees’ salary component based on factors like pay scale, position, title, etc. The employee avails the benefits of the leave travel allowance and only if it is part of the salary structure.
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for claiming LTA tax exemption for FY 20-21, in which year we have to do actual travel.
Can travelling in calendar year 2019 or 2020 or 2021 will work.
Hi Rajesh,
LTA has to be claimed in the same year you travelled. To submit your claim in FY 2020-21 you must have travelled in 2020.
Can i claim LTA every month without travelling . Like i have 1,00,000 Of claim so if take every month without travelling which comes down to apporx 8,333/ Monthly
is this possible ?
Hi Naishadh,
Please note that you cannot claim LTA in every financial year. It can be claimed only for two journeys in a block of 4 years.
Dear Madam,
Can a company remove LTA frm your CTC of lower grade employees n not the top Executive without Intimation.How far it is justified