Leave Travel Allowance (LTA) Claim Rules, Exemption for Claiming

Last Updated on 09/01/2024 by Pardeep Garg

Leave Travel Allowance (LTA) is a part of your salary just like other allowances like HRA, TA, etc. But it is not included in your total taxable income. It is the allowance you get to compensate for your travel expenses. And you can claim for an LTA tax exemption every block year you receive it.

LTA is an exemption which means that it is very different from the deductions mentioned in your salary slip. Deductions include the money you pay towards your loans, insurances, etc. and these are deducted from your net taxable income. On the other hand, exemptions are not at all added to the total annual taxable income.

Apart from that, there is a lot to know about the Leave Travel Allowance (LTA). So, if you have any doubts about LTA, this blog will help you out. Keep reading to find out!

What is meant by Leave Travel Allowance?

Leave Travel Allowance is the amount provided to the employee to compensate for the travel expenses they incur, when on leave. This is a type of allowance provided by your employer, just like travel allowance and house rent allowance. There are also several rules put forward by the Income Tax provision with regards to claiming a tax exemption for LTA.

As per Section 10(50) of the IT Act, the LTA received will be eligible for tax exemption from the net annual income. So, you need to consider a lot of factors before you plan your travel while keeping in mind the LTA claim.

Rules to Follow While Claiming LTA Exemption

Given below are the rules you need to abide by while claiming for your LTA exemptions:

The claimant has to have the actual journey to claim the exemption amount.
The travel needs to be a domestic one, i.e. within the country boundaries. So, international travel plans cannot be covered by LTA.
The claimant needs to travel alone or with their family. And the employee’s family could include their spouse, dependent parents, children, and siblings. Also, you can only cover the travel costs of two children born after October 1, 1998. So, this implies that the children born before October 1, 1998, are not limited by this clause.
An employee can claim their LTA for only 2 journeys every 4 years (of the LTA block year)

Leave Travel Allowance (LTA) Exemption

Leave Travel Allowance covers the travel costs like bus fare, railway, or, airplane tickets. Other expenses such as sightseeing, food costs, sightseeing, etc. cannot be claimed under the LTA. Also, your actual coverage depends on the Leave Travel Allowance given by the company/employer.

Keep in mind that costs like medical expenses incurred while on the trip, theft, accident, and other similar things won’t be covered by your LTA. Instead, you can get travel insurance to receive coverage for such issues.

For example, if your employer provides an LTA of INR 40,000 but the actual cost of travel is INR 25,000. Then, the balance of INR 15,000 will be added to your taxable salary. Meanwhile, you will receive an allowance of INR 25,000 only which is equal to the actual travel expenses.

Sl. No.	Scenario	Eligible LTA Exemption
1.	The travel destination is accessible by any public means of transport	The eligible amount of LTA will be the fare of the first-class AC rail tickets. And it is given out for the shortest existing rail route to the journey destination
2.	The destination can’t be reached via railway but is well-connected via other means of transport	The LTA exemption amount will stay limited to 1st class fare (or deluxe class), for the shortest path available to the destination
3.	Destination and the starting point are well connected by rail	The exemption amount shall be restricted to the 1st class AC rail fare via the shortest route to your destination, for any means of transport
4.	For air travel to the travel destination	The eligible LTA exemption is restricted to economy class airplane fare via the national airlines, i.e. Air India, through the shortest path applicable.

Leave Travel Allowance (LTA) Block Year

The block year is not the same thing as a financial year. Its concept was started in the year 1986 by the government and each block year consists of a batch of 4 years. The LTA block years that followed thereafter are:

1986 to 1989
1990 to 1993
1994 to 1997
1998 to 2001
2002 to 2005
2006 to 2009
2010 to 2013

The present block year is 2018 to 2021 and the one preceding this one was 2014 to 2017.

Unclaimed Leave Travel Allowance (LTA)

It might happen that you have forgotten to avail of the LTA exemption or just have not taken it. And this is applicable for either 1 or 2 journeys within the 4 years of the block year. Then, you can carry this over to the next block year. Keep in mind that you have to claim for the carried over exemption in the first year of the block.

Let’s look at a couple of examples to get a better understanding:

Case 1: Suppose the Carryover LTA exemption gets claimed in the first year following the block

Let’s say, you went for a journey in April 2015 of the block 2014 to 2017 and don’t claim the LTA exemption in this period. But, you claimed this exemption carried over to the next block (2018 to 2022), in June 2018. So, that means that you claimed the carryover exemption in the first calendar year of the immediate next block.

And then again, you claim two more LTA exemptions for travels in 2020 and 2022. Hence, if you don’t claim the LTA exemption within the block year, then you can carry over it to the immediate next block. And claim the exemption in the first year of this block and yet, be left with two more LTA exemptions in the current block.

Case 2:

Let’s say that you didn’t claim the carryover exemption in the first year of the 2018 to 2022 block because you didn’t travel in 2018. Now, if you choose to travel in 2019 and then claim the LTA exemption for the same, then, it can’t be considered as carried over from the last block.

For LTA carry-over from the previous block to apply, you should have travelled in 2018, i.e. the first year of the block. Also, now you can make only one more LTA exemption in the current block instead of 2 like in the previous case.

Expenses That Can Be Covered by LTA

You can avail of the tax exemption benefits on your actual travel expenses that you incur on your journey in any of the following means of transport:

1. Air Travel

If you are traveling via an airplane, then you’ll receive the airplane fare of an economy class ticket as your LTA. And that too of the national airline carrier, i.e. Air India, for the shortest route to the destination. But, you’ll get a lesser LTA tax exemption if the actual airplane fare incurred was lesser.

2. Rail Travel

If your place of destination and origin, both are well-connected via rail, then you can go for this one. You will get the First Class AC train fare via the shortest route, or the actual train fare, whichever was lesser. This is also applicable for other transportation modes other than air.

3. Other Transport Modes:

If the destination and the travel origin are not connected via railways but a recognized transportation mode exists to reach the place exists. Then, you’ll receive an exemption for the first class or the deluxe class fare via the shortest possible route. Or, you’ll get the actual fare, whichever comes out to be lesser.

If there are no recognized transport means that connect the destination to the origin of the journey. Then, you will be handed out the first-class AC rail fare for the distance of the journey assuming as if it was executed via train.

Claiming LTA for a Multi-destination Journey

It might be the case that the claimant has planned a journey with multiple destination stops. In this situation, only the expenses incurred for the shortest available route from the starting place to the most distant place in the journey can be covered.

What will happen to my LTA if I don’t travel?

The Leave Travel Allowance is a part of the salary structure. So, the LTA will get added to your salary slip and credited to your account as part of the salary regularly. But, if you choose not to travel, then the LTA will be added to your taxable income.

How to Claim Your LTA?

Your Leave Travel Allowance calculation depends on the company/ employer. The reason behind it is that the employer is supposed to announce how much of an LTA the employees shall receive, the due date for it, and other related aspects.

Keep in mind that it isn’t compulsory to produce and submit the proof of your travel. But, it is better to keep a copy of the same, for instance, the original tickets, boarding pass, commute fares, invoices, and so on.

Why Should You Submit Proof of Travel To Claim LTA?

This is recommended due to the following two reasons:

Tax Authorities might demand these for verification any time, or there could be an enquiry for the same.
Moreover, you should submit your travel documents to your employer to make sure that the tax calculations are done properly.

Employee Eligibility for LTA

As it turns out, all employees cannot enjoy the benefits of LTA. The reason that whether you can or cannot claim for LTA exemption, depends on your job profile. Your job role, position, pay scale, and other factors, play a major part in deciding your LTA amount.

Based on these conditions, your employer decides the amount of money that needs to be allocated for your LTA. Also, to claim for an LTA, you need to travel within the years comprised in the block year.

Benefits of Leave Travel Allowance (LTA)

1. Domestic Trips Covered

You can go for a trip to any part of the country and as long as it is within the boundaries of India, the travel costs will be compensated for by your LTA.

2. Tax Savings

Your LTA is tax-exempt so it is a great tool when it comes to saving up on your Income Tax. But, the amount is the lower one out of the limit set by the employer or the actual travel expenses.

3. Coverage for Family Members

Besides covering your travel expenses, your LTA also covers your family’s travel expenses, provided they have joined you for the same trip. So, you can go for a solo trip or with family and have the travel costs covered by the LTA.

4. Modes of Transport

You can go for a journey on an airplane, rail, bus, or any other authorized mode of transport. And you can avail of the LTA exemption for the same to save on taxes.

FAQs

Q. What is included in an LTA?

Your LTA compensates for your travel expenses only. It doesn’t include other expenses incurred such as food, hotel stay, medical bills, and other such things. So, if you want better protection and coverage while on a trip, then you can get travel insurance.

Q. What are the maximum number of LTA claims that I can make in a financial year?

You can avail of a maximum of 2 claims for every block of 4 years. But, in the case of a carryover, you can claim more than that.

Q. Can I travel overseas using my LTA?

No, you cannot. Leave Travel Allowance is to reimburse for travel taken within the boundaries of India (domestic travel).

Q. Will the LTA cover the travel costs of my family as well?

Yes, your LTA can cover the travel costs of your family members too. It covers travel expenses of yourself, your spouse, dependent parents, children, and siblings too.

Q. How many travels can be made in a year for LTA exemption?

You can claim tax exemption for your LTA for only one travel trip in a year. Also, you can make a total of two such exemptions in each block year comprised of 4 years.

Image Credit: Cleartax.in