All about Leave Travel Allowance (LTA) in India

Leave Travel Allowance (LTA) is provided to the employees for travelling and it covers only the travel expense incurred during the travel

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Leave Travel Allowance (LTA) is the travel allowance an employee receive from his employer when he or she is on leave from work, with family (where family means spouse, two children and wholly dependent parents or siblings) or alone. LTA allowance can be availed on a trip within India not for foreign travel; the allowance paid is tax free.

Chitkara University Fees structure can be found on their official website.

How can you claim your LTA?

Two journeys can be claimed in a block of 4 years. LTA varies from person to person though, depending on the salary structure of the employee.

You can claim your LTA by applying for a travel leave at work, and then submit documents as evidence proof of your travels. And even if you don’t submit your travel bills, or don’t travel lot, you will get reimbursement in your salary after tax deduction.

A short detour from the topic- CAT 2018 application form has been released.

What makes you eligible for LTA?

Not all employees are eligible to avail LTA. Based on various factors like grade, pay scale, and so on, your employer decides whether or not you are entitled to receive a certain amount as LTA. 

Documents that are needed to avail LTA

You have to submit the LTA form along with your travel bills. Although generally travel proof needn’t be checked, it is still preferable to preserve your travel documents to produce if required.

The Rules & Regulations of LTA

  • LTA only covers domestic travel.
  • All the travel documents should be preserved for a tax audit check, in case done.
  • The LTA an employee receives has a LTA exemption which is limited to the CTC (Cost To Company) the company provides, it cannot go beyond the actual LTA provided.
  • LTA only covers your travel costs; it doesn’t cover your hotel, food or shopping expenses.
  • If you didn’t claim your allotted two LTA’s in a block, you can take it forward to the next block, and avail a total of 3 LTA, but you’ll have to make the journey in the first year of the block.
  • If the employee travels through air, an “economy class fare” of the Airlines is allowed as an exemption..

LTA exemption is available for travel by air, rail or public transport. If the travel by rail or by air isn’t available for the journey, you can avail the LTA if the mode of transport is:

  1. A recognised mode of transport exists;
  2. The LTA exemption is lower for first-class transport means, provided the journey is made by the fastest route possible.
  3. A recognised mode of transport isn’t available; In this case, the same rules apply- Exemption is lower for first-class/air-conditioned travel, and for the shortest route possible.

Tax Rebate

In a scenario where you were unable to claim your LTA, you can move it to next year. LTA exemption doesn’t come under ITR (Income Tax Return) Filling. Your employer will approve your LTA claim and file it under Form 16.

Benefits of LTA

  • LTA is one of the factors of the salary structure that helps you save in income tax.
  • On producing travel bills for travel via air/ rail/ public transport, the employee can save taxable income.
  • LTA is added to salary of the employee by the employer based on salary, position, title, etc. (LTA is availed as a part of the salary structure).
  • LTA covers the expenses of you and your family which includes parents, spouse, children and siblings as well; provided you travelled with them.

How do you calculate your LTA?

An employee can avail his/her LTA twice in a block. The number of years in a block are calculated by the income tax department and are different from financial years. Currently a block is from 1st January 2016 to 31st December 2017. And if the LTA has not been used during the duration of a block, as mentioned earlier, the LTA can still be claimed next year, during the next block. These year blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).

Example of Leave Travel Allowance (LTA) in India

Selvi works in Chennai and she gets an LTA of Rs. 20000.

She goes for a vacation from Chennai to Mumbai on economy class air tickets for Rs. 12,000, the hotel stay bill amount to Rs.5,000 and food and refreshments cost her around Rs 4,000.

So She is eligible for an LTA exemption of maximum of Rs 12,000 only. Further, she cannot claim any tax benefit for hotel bills, food bills etc.

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