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Leave Travel Allowance (LTA) - Exemption Limit, Rules, How to Claim, Eligibility & Latest Updates

Updated on : Jun 4th, 2024

The Income-tax Act, 1961 offers salaried individuals several tax exemptions, beyond deductions like LIC premiums and housing loan interest. While deductions reduce your total taxable income, exemptions exclude specific types of income from being taxed altogether. This allows employers to design an employee's Cost to Company (CTC) package in a tax-efficient manner.

One such exemption available to the salaried class under the law and widely used by employers is Leave Travel Allowance (LTA)/Leave Travel Concession (LTC). LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination of service. LTA can be claimed for any two years in a block of 4 years . The current block year for claiming LTA is 2022 to 2025.

Note: The tax exemption of leave travel allowance is not available in case you choose the new tax regime .

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance/Leave Travel Concession is a type of allowance given by an employer to their employee for travelling to any place in India: either on leave, after retirement or after the termination of his service. Though it sounds simple, many factors need to be kept in mind before you plan to claim an LTA exemption. Income tax provision has laid down rules for claiming exemption of LTA which are provided below.

Note: The red arrow shows the lower of the two amounts will be exempted. For instance, if you travel by air, the exemption amount will be either your actual travel costs or the cost of an economy class ticket, whichever is lower. The journey should be taken through the shortest route to the destination. 

Who Can Claim LTA?

Only individuals can claim LTA for travel costs incurred for themselves and their family (Spouse, children, wholly or mainly dependent siblings, parents)

Conditions for Claiming LTA

Let us understand the conditions/requirements for claiming the exemption:

• Actual journey is a must to claim the exemption
• Only domestic travel is considered for exemption, i.e., travel within India. No international travel is covered under LTA/LTC
• The exemption for travel is available for the employee alone or with his family, where ‘family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee. 
• Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restrictions. Further, in cases of multiple births on a second occasion after having one child is also not affected by this restriction.

Amount of LTA/LTC Exemption

The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTA provided by the employer.

For example, if LTA granted by the employer is Rs 30,000, and the actual travel cost incurred by the employee is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary income.

Exemption w.r.t Various Modes of Transport

Can lta exemption be claimed on every vacation.

No, an LTA exemption is available for only  two journeys performed in a block of four calendar years .

A block year is different from a financial year and is decided by the Government for LTA exemption purposes. It comprises 4 years each. The very first 4-year block commenced in 1986. The list of block years is 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. The block applicable for the current period is  2022-25. The previous block was the calendar year 2018-21.

Carryover of Unclaimed LTA/LTC

In case an employee has not availed exemption with respect to one or two journeys in any of the block of 4 years, he is allowed to carryover such exemption to the next block provided he avails this benefit, in the first calendar year of the immediately succeeding block. 

Consider the below example for a better understanding:

• Where carry over exemption is claimed in the first calendar year of the immediately succeeding block

• Where carry over exemption is not claimed in the first calendar year of the immediately succeeding block

Procedure to Claim LTA

The procedure to claim LTA is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc., along with the mandatory declaration. Though it is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit them to the employer based on the LTA policy of the company to tax authorities on demand.

Multi-Destination Journey

Income tax provision provides exemption w.r.t travel cost incurred on leave to any place in India. Conditions pertaining to the mode of transport also refer to the place of ‘origin’ to the place of ‘destination’ and the route which must be the shortest available route.

Hence, if an employee travels to different places in a single vacation, the exemption can only be availed for the travel cost eligible from the place of origin to the farthest place in the vacation by the shortest possible route.

LTA Exemption for Vacation on Holidays

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organisations may reject LTA claims for travel on official holidays or weekends. 

Also read about: Basic Salary UAN Login Last Date to File ITR   Section 115BAC of Income Tax Act   Income Tax Deductions List How to e verify ITR   Annual Information Statement (AIS) Section 80D   Home Loan Tax Benefit Budget 2023 Highlights House Rent Allowance (HRA)

Frequently Asked Questions

The amount of LTA/LTC exemption depends on the LTA/LTC component in your compensation package or CTC. You can furnish proof of travel within the block period and claim up to the amount prescribed in your CTC.

The latest block period of four years is from 1 January 2022 until 31 December 2025.

You can claim LTA/LTC exemption only for one trip in one calendar year.

You can claim LTA/LTC benefit for the travel costs of yourself and your family consisting of your spouse, children, dependent parents, brothers, and sisters of the employee.

No, LTC is taxable in case of new tax regime and exempted if chosen to pay tax under old tax regime by fulfilling the required criteria.

Exemption will be available in respect of 2 journeys performed in a block of 4 calendar years.

Yes, you can avail LTC in current block (2022-2025), if you have not availed LTC in previous block. (2018-2021). Where such travel concession or assistance is not availed by the individual during any block of 4 calendar years, one such un-availed LTC will be carried forward to the immediately succeeding block of 4 calendar years and will be eligible for exemption. 

Below example gives you clear understanding :

Example : An employee does not avail any LTC for the block 2018-21. He is allowed to carry forward maximum one un-availed LTC to be used in the succeeding block of 2022-25. Accordingly, if he avails LTC in April, 2023, the same will be treated as having availed in respect of the block 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block of 2022-25.

Illustration : Mr. D went on a holiday on 25.12.2023 to Delhi with his wife and three children (one son – age 5 years; twin daughters – age 3 years). They went by flight (economy class) and the total cost of tickets reimbursed by his employer was 60,000 (45,000 for adults and 15,000 for the three minor children). Compute the amount of LTC exempt if Mr. D chose to pay taxes under old regime.

Solution :  Since the son’s age is more than the twin daughters, Mr. D can avail exemption for all his three children. The restriction of two children is not applicable to multiple births after one child. The holiday being in India and the journey being performed by air (economy class), the entire reimbursement met by the employer is fully exempt in the hands of Mr. D, since he chose to pay taxes under the old regime.

In the above illustration, will there be any difference if among his three children the twins were 5 years old and the son 3 years old? 

Since the twins’ age is more than the son, Mr. D cannot avail for exemption for all his three children. LTC exemption can be availed in respect of only two children. 

Taxable LTC = 15,000 × 1/3 = 5,000. 

LTC exempt would be only 55,000 (i.e. 60,000 – 5,000).

About the Author

Ektha Surana

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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• What is Leave Travel Allowance? A Complete Guide
• Post author: fincart
• Post published: October 20, 2023
• Post category: Income Tax

Table of Contents

We all like traveling these days, don’t we? Every year we all plan to make at least one trip. But little do we know that we could claim one of the allowances if provided by your employer. It could also help you to save taxes too!  But how do you claim it? Can you claim it every year? How much amount does it cover? What is included in this? Is there an eligibility criterion to claim this allowance?

Tax deductions and exemptions provided by the Income Tax department have allowed us to save the most amount of tax possible. By using these exemptions, employers can structure employee Cost to Company (CTC) in a tax-efficient manner. Leave Travel Allowance (LTA) is an exemption available to salaried workers under the law that is also widely used by employers.  

When planning travel to claim an LTA exemption, many factors need to be considered. LTA exemptions are governed by income tax provisions: 

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) is an allowance provided by employers to employees who are on leave from work to cover their travel expenses. By the Income Tax Act, of 1; 961, LTAs are an important component of an employee’s salary, as they are eligible for income tax exemptions, making them a valuable tool for tax saving . LTA received by the employee during the year will not be included in his net income under Section 10(5) of the Income Tax Act.

Example of LTA

Assume that LTA granted by your employer is Rs 30,000, and the actual travel cost is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary.

Take another example, suppose the Leave Travel Allowance provided by the employer is Rs 25,000. The actual expenses spent on travel are Rs 30,000. Here, the LTA exemption allowed would be Rs 25,000 irrespective of a higher amount spent on travel.

Benefits of Leave Travel Allowance

1. Tax Exemption : LTA provides tax benefits as the amount spent on eligible travel expenses is exempt from income tax.

2. Family Inclusion : The allowance covers immediate family members, promoting family travel and bonding.

3. Domestic Exploration : Encourages employees to explore different parts of India, contributing to tourism and cultural exchange.

4. Reimbursement : Allows reimbursement of actual travel expenses or up to specified limits, easing financial burden on employees.

5. Employee Well-being : Promotes work-life balance by facilitating quality time with family during approved leave periods.

Conditions to claim Leave Travel Allowance exemption

The following conditions must be satisfied to claim an LTA exemption:

• You can claim LTA for travel costs incurred for yourself and your family.
• LTA can be claimed for any two years in a block of 4 years. The current block year for claiming LTA is 2022 to 2025.
• The actual journey is a must to claim the exemption.
• The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. Local conveyance, sightseeing, hotel accommodation, food, etc., are not eligible.
• The exemption is also limited to LTA provided by the employer.
• It applies to travel only within the country.

What is the eligibility for LTA exemption?

The LTA (Leave Travel Allowance) exemption for tax purposes is based on the actual travel cost. It covers expenses for a journey from the employee’s origin to the destination and back, using the shortest route by air, rail, or bus. Only the cost of travel tickets is eligible for exemption. Other expenses like conveyance, sightseeing, accommodation, shopping, and food are not allowed. If the employer’s LTA allowance is less than the actual travel cost, the exemption is limited to the employer’s provided amount.

Documents required for claiming LTA

To claim LTA, fill out the LTA application form supplied by your employer, including essential details like travel date, destination, mode of transport, and incurred costs. Alongside the application, submit supporting documents such as tickets, boarding passes, and invoices as evidence for your LTA claim. These documents are crucial to validate your travel expenses and support your application.

LTA Exemption Rules for Various Modes of Transport

The LTA claim depends on the mode of transport.

• If travel is by air, the LTA limit is Actual Expenses or Economy class air fare of the national carrier by the shortest route to the place of destination, whichever is lower.
• If travel is by rail, the LTA limit is Actual Expenses or first-class AC rail fare by the shortest route to the place of destination, whichever is lower.
• If travel is by a recognized public transport system, the LTA limit is Actual Expenses or 1st class/ deluxe class fare by the shortest route to the place of destination, whichever is lower.
• If no recognized public transport system is available, the LTA limit is Actual Expenses or first-class rail fare by the shortest route to the place of destination, whichever is lower. (It is assumed as if the journey had been performed by rail.)

How Much Leave Travel Allowance Exemption Will You Get?

There is a limit on how much LTA an employer may provide as an exemption. For instance, if Rs. 30,000 of LTA is granted by your employer and the actual travel cost incurred is Rs. 20,000 by an employee then the exemption will only be available till Rs. 20,000. Therefore the balance of Rs. 10,000 will be included in the taxable salary income.  Procedure to Claim LTA

LTA claims are generally handled by employers. Employers announce the deadline for employees to claim LTA and may require employees to submit proof of travel along with the mandatory declaration, such as tickets, boarding passes, invoices from travel agents, etc. Although employers don’t need to collect proof of travel, it is always advisable for employees to keep copies for their records as well as to submit them to their employer on demand based on the LTA policy of the company.

What Happens to LTA If There is No Traveling Involved?

Because the LTA is part of your salary structure, it is automatically credited to your account regularly. If you do not travel or do not have a valid proof of travel, you cannot claim the LTA received for tax exemption purposes. Your net taxable income will be increased if you receive an LTA.

What expenses can be included under LTA?

Under the Income Tax Act, LTA (Leave Travel Allowance) can include the following expenses:

Travel Expenses : LTA encompasses the travel costs for the employee and their immediate family members (spouse, children, and dependent parents or siblings). The travel can be by air, rail, or public transportation, following the employer’s or Income Tax Department’s specified rules.

Destination : LTA is applicable for travel within India. Employees can claim expenses incurred on travel to any location in India during their leave period.

Mode of Travel : LTA covers expenses for travel by air, train, or other public transportation. Reimbursement is based on the actual amount spent or as per limits set by the employer or tax authorities.

Leave Period : LTA can be claimed for travel during the employee’s leave period, including annual leave, casual leave, or any other approved form of leave.

Unclaimed LTA

Unclaimed LTA is allowed to be carried forward. If an employee has not availed LTA exemption once or twice in a block of 4 years, he is allowed to carryover one exemption to the next block provided he avails this benefit, in the first calendar year of immediately succeeding block.

For example, during the 4-year block of 2014-2017, if you did not claim LTA or claimed it only once, then you will be allowed to carry forward one LTA to 2018 (first year of next block, i.e. 2018-21). Thus, from 2018 to 2021, you will be able to claim LTA three times.

Can Unclaimed LTA be Carried Over to the Next Block Year?

Under the carry-over concession rules, under which the employee can claim LTA tax breaks on three journeys made in the current block of years if he hasn’t claimed LTA in the last running block or has just claimed it once, the employee can still claim one additional LTA in the next block of calendar years. To utilize the carryover concession facility, one LTA exemption for the journey must be claimed during the first calendar year of the next block.

For instance, in the last block of the year, between 2018-2021, you made only one tax exemption claim under LTA as an employee. Therefore, you become eligible for LTA claims for up to 3 journeys in the current block, between 2022 and 2025. However, your first claim must be filed in the first calendar year of the current block, i.e. in 2022.

Also Read: Smart Tax Planning Strategies for High Earners

Leave travel allowance is an amount provided by the employer to the employee for Travelling while on Leave. This is a part of your salary which is exempted from tax.

Employees in India are generally eligible for LTA. To claim LTA, employees must undertake travel during their leave period, and the exemption is subject to specified conditions and limits set by the income tax regulations.

Under LTA, expenses related to travel within India are covered. This includes the cost of transportation by air, rail, or bus for the employee and eligible family members.

LTA can be claimed for two journeys in a block of four years and not on every financial year.

The concept of “block years” in the context of LTA (Leave Travel Allowance) refers to a four-year block set by the income tax authorities. This block consists of four consecutive calendar years, during which an employee is allowed to claim LTA for up to two trips.

No, LTA (Leave Travel Allowance) is specifically applicable for domestic travel within India.

For LTA exemption, the costs incurred for family members traveling with the employee are allowed. Family members include spouses, children, dependent parents, and dependent siblings.

The exemption can be claimed for up to two children if born on or after 1st October 1998.

LTA exemption is calculated as the least of the actual travel expenses incurred on a trip within India or the fare of the equivalent journey by the shortest route in the chosen mode of transportation (air, rail, or bus). Again, it is limited to the LTA component in your compensation package or CTC.

If an employee doesn’t travel at all or lacks valid proof of travel, they cannot claim LTA for tax exemption purposes. In such a scenario, the received LTA amount is treated as a part of the employee’s taxable income.

If an employee does not fully utilize their LTA entitlement in a particular block of four years, it can be carried over to the next block. But the employee is usually required to utilize this carryover LTA in the first calendar year of the immediately succeeding block.

If the unutilized LTA is not claimed within the first year of the next block, it will expire and would not be allowed to be claimed later on.

Yes, there is a specific deadline for employees to claim LTA. Usually, LTA can be claimed for exemption twice under the block of 4 years.

No, LTA (Leave Travel Allowance) is specifically designed for personal travel during leave periods and cannot be claimed for business trips or official travel.

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LTA (Leave Travel Allowance): Meaning, Rules, Tax Exemptions and Conditions to claim

Hiral Vakil

Travelling offers a wide range of benefits. Taking time away from daily routine can reduce stress and improve mental and emotional well-being. However, vacations can be expensive. Income Tax provides various exemptions on such expenses to salaried individuals. One such exemption available is LTA i.e. Leave Travel Allowance. LTA is an allowance employers give to their staff for vacations in India.

LTA: Meaning

Conditions to claim lta exemption, leave travel exemption: eligibility, how to claim exemption on leave travel allowance.

Leave Travel Allowance is an allowance employers give to their employees as a part of CTC for travelling alone or with family to any place in India : 

• either on leave or
• after retirement from service or
• after termination of service.

Income tax has laid down rules for claiming exemption of LTA.

Section 10(5) of the Income Tax Act along with Rule 2B has prescribed the conditions and limit of exempt leave travel allowance.

• Leave travel allowance should be a part of the employee’s salary structure.
• An exemption is available for actual expenses incurred by the employee including their family for domestic travel only.
• Spouse and children
• Parents, brothers, and sisters who are wholly or mostly dependent on the employee.
• Further, this exemption can be claimed for a maximum of two children born after 01/10/1998. For children born prior to this date, there is no restriction.
• It covers only the cost of travel for the trip (travel by rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
• An exemption is available only for two trips in a block of four calendar years . The current block for leave travel is from 2022 to 2025.
• If an exemption is not availed during the block period, it can be carried over to the next block and used in the first year of the next block.

Let’s understand with an example:

Let’s say, an employee does not avail Leave Travel allowance for the block of 2018-2021. He is allowed to carry forward a maximum of one unavailed LTA to be used in the succeeding block of 2022-2025. Accordingly, if he avails LTA in April 2022, the same will be considered for the block of 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block 2022-2025.

The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accommodation, food, etc are not eligible for this exemption. It is also limited to the LTA provided by the employer. For example: If the actual expense incurred is INR 50,000 but LTA as part of Salary is INR 35,000 then the maximum exemption available would be INR 35,000 only.

Exemption when various modes of transport are used for travel

Employees can claim Leave Travel Allowance exemption by submitting details in Form 12BB . They should submit the proof in support of their claim. Further employees can submit boarding passes, air tickets, train tickets, invoices from travel agents, etc, as documentary proof to their employers.

No, LTA can be claimed only for domestic travel. You can only claim LTA if the Employer provides it as part of your salary.

If an employee travels to different locations on a single vacation then the exemption available will be for the travel cost eligible from the place of origin to the farthest location by the shortest route possible.

It depends on the organisation’s policies as many companies allow LTA exemption only if employees take specific leave for vacation and not on official holidays or weekends.

No, You can claim LTA exemption only twice in a block of 4 calendar years. The current block of four years is 2022-2025.

Employees are advised to maintain proof such as flight tickets, invoices from travel agents, passes, etc. as they have to be submitted to the employer.

Employees can know the exempt Leave Travel Allowance amount from Form 16 issued by the employer at the end of the financial year. It is exempt u/s 10(5) of the Income Tax Act.

Since Leave Travel Allowance is a part of salary income, an employee can file ITR-1 while claiming exempt LTA. However, salaried need to file ITR-2 if their income is more than Rs. 50,00,000.

Got Questions? Ask Away!

Hey @sushil_verma

There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens ) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA) , conveyance , transport allowance, medical reimbursement , etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

• Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
• Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
• Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

No issues. You’re welcome!

Hey @shindeonkar95

In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

Hope, it helps!

Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

I couldn’t find anything on this. Any help is appreciated.

Hello @Veejayy ,

Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

Also, interest earned on these bonds will be taxable.

Hope this helps!

Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

Hey @Sheirsh_Saxena , yes, the investment amount needs to be added under 80C.

Continue the conversation on TaxQ&A

90 more replies

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Last Updated on 7 months by Shreya Sharma

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How to claim lta: eligibility, lta rules, documents you need to submit, how much amount you can claim and more.

Leave Travel Allowance or LTA, a component in your salary, helps offset travel expenses incurred during your vacation. The benefit extends to family – covering travel costs for your spouse and dependent children, and family members. To claim LTA, you need to submit documented proof of travel costs to your employer within the stipulated deadlines. Who can claim LTA? What are the documents that you need to submit? What are the conditions you need to keep in mind while claiming LTA? All questions answered.

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Home » Job Tips » Salary » Leave Travel Allowance

What is LTA? – Eligibility Criteria, Process, Calculation, & More

Introduced in 1986, the LTA scheme was initially rolled out for the government and public sector undertaking employees in India. Later, private sector employees were included in it too. Since then a number of employees have utilized the LTA scheme for their travel expenses. If you are a salaried employee going on leave soon, make sure you are well-versed with LTA.

This blog will help you understand what is LTA , the eligibility criteria to claim it, the procedure, conditions, and documents required, and even the restrictions and benefits of LTA.

Table of Contents

What is Leave Travel Allowance (LTA) in Salary ?

Leave Travel Allowance or LTA is an allowance that employers pay to their employees when the latter is on leave and traveling, either alone or with family within India. The amount paid to the employee as LTA is tax-free subject to certain conditions. 

The conditions and amount of the leave travel allowance are given in Section 10(5) of the Income Tax Act, 1961 along with Rule 2B of Income Tax Rules. It is important to note that employees who have opted for the new tax regime are not eligible to claim LTA. Learn personal finance to expand your knowledge on taxation and savings to manage your finances better.

Eligibility Criteria for LTA Exemption

The eligibility criteria that the employees must meet to claim leave travel allowance are as follows:

• The exemption is for salaried employees who have incurred expenses on travel. 
• The travel destination must be within India since international travel is not included in the exemption.
• Only those employees who have taken a leave from work for the purpose of travel can make an LTA claim . 
• Employees can claim LTA for a maximum of two journeys undertaken in a block of four calendar years. The current block of travel is from 2022 to 2025.
• Employees should possess proof of travel expenses in the form of boarding passes, hotel bills, etc. 
• LTA exemption can be claimed only within the specified period, after which it is deemed to lapse. 

Procedure to Claim LTA

The procedure to claim LTA is simple. Follow these steps to claim LTA in salary:

• Check Your Eligibility- Ensure you are eligible to claim LTA according to your employer’s policies as well. There is a minimum number of years of service requirement, specified by the employer before you can claim any exemption. Hence, check it before applying for LTA. 
• Plan Your Travel- To avoid any last-minute problems, make sure to plan your travel and keep proof of every travel expense, especially the tickets and the boarding passes. 
• Apply for LTA- In the LTA application form provided by the employer, fill out all the details such as date of travel, mode of travel, destination, costs incurred, number of family members, etc.
• Attach Relevant Proof Documents- Attach the travel proofs that you have collected with your LTA application. 
• Await Approval and Reimbursement- Now all you have to do is wait for your LTA claim application to be approved and then the reimbursement. Employers can either combine the LTA allowance with the salary or as a separate payment for reimbursement.

NOTE: An important point that the employees should keep in mind is that if only one LTA is claimed out of two within the block year, then the employee can claim the unused one in the next block. But this travel journey has to be made in the first calendar year of the next block, after which the unutilized LTA will expire. 

Documents Required for LTA Claim

The following are the documents required to be submitted by salaried employees to their employers:

• Travel tickets (for train, road, or air)
• Proof of expenses such as boarding passes, hotel bills, cab receipts, etc. 
• Leave approval application showing that the leave was taken to travel.
• LTA form duly filled in by the employee, detailing the exempt amount being claimed. It is provided by the employer. 
• Travel itinerary that outlines the places traveled and the duration of travel.
• PAN card details of the employee are to be provided to the employer. 
• Bank account details for receiving reimbursement for travel expenses.

Conditions for Claiming LTA

There are certain conditions that the employees must fulfill to claim LTA. These are as follows:

• The employee must actually travel to claim LTA.
• The family members covered under the rules are spouses, children, dependent parents, and dependent siblings. They must be traveling with the employee and not separately.
• The salary structure of the employee must contain LTA components.
• Only two children born on or after 1st October 1998 are covered under the exemption. There is no restriction regarding children born before this date. 
• The LTA claim can be made for any mode of travel, that is, by road, train, or air. 

LTA Exemption Rules for Various Modes of Transport

LTA covers the various modes of transport for travel. Refer to the given table to understand the exemption rules for different modes of transport:

How is LTA Calculated?

Here are the steps followed to calculate the LTA:

• First employee’s eligibility is checked based on the conditions prescribed in the employer’s policy and IncomeTax Act,1961.
• Then the cost of travel for the employee and their family members is calculated. 
• Now the maximum LTA exemption is calculated. The calculation is based on the fare for the shortest route to the destination by economy class of the national carrier. 
• Note that if the cost of travel is less than the maximum LTA calculated, then an exemption can be claimed for the actual cost of travel.
• But if the cost of travel is more than the maximum LTA calculated, then an amount only up to the maximum LTA exempt amount can be claimed. The excesses can be claimed as taxable income. 
• Once we have the final amount after all the calculations, the exemption amount is deducted from the employee’s taxable income.

LTA Claim Restrictions

Though LTA is a beneficial tax exemption for employees, there are certain restrictions as well. These are:

• LTA can be claimed only for domestic travel, that is, within the country, and not on international travel.
• The number of times you can claim LTA is limited. 
• Employees need to maintain proof of travel which can be a task for some.
• LTA exemption covers only the actual travel expenses and not the other expenses such as hotel accommodation and food bills. 
• No LTA can be claimed can be made on cash payments. You will only get an LTA allowance on payments made through bank accounts online, cheques, or any digital payment mode . 

Benefits of LTA

The following are some important benefits of LTA in salary:

• LTA is an essential source of saving tax.
• It encourages tourism and aids the travel industry.
• It also helps in cost optimization as the employees do not have to spend much. They also plan to keep in mind the allowance they will receive and the best options they have for other expenses. 
• LTA plays a role in maintaining the work-life balance as the employees can travel with their families and spend some time with them. 
• The LTA exemption claim is also flexible as it includes the travel expenses of the accompanying family members as well. Also, you can choose the mode of travel according to your requirement since all three–train, air, and road are covered under LTA. 

We have discussed what is LTA , the eligibility to receive LTA allowance, the procedure to claim LTA, the documents required, the conditions to be met, how it is calculated, and the restrictions and benefits of LTA. All of this information will help you in proceeding with your LTA application comfortably.

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Leave Travel Allowance: Here is all you need to know about claiming LTA from your employer

Lta tax exemption falls under section 10(5) of the income tax act, wherein the employee can get his/her travel expenses reimbursed from the employer. the expenses include only travelling expenses and not other expense such as food, shopping, lodging etc..

The current financial year 2019-2020 is going to end soon, and most taxpayers are making investment declarations in a bid to save income tax. Among the many options available, Leave Travel Allowance (LTA) is one of the ways to save tax. This comes with the added benefit of the employee getting to spend quality time with his/her family, and at the same time reduce the burden of tax liability up to a certain limit.

Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) is the employer’s reward to employees for the hard work, wherein they grant the employees leave while bearing all travel expenses. Additionally, LTA also helps the employee save tax .

LTA tax exemption falls under Section 10(5) of the Income Tax Act, wherein the employee can get his/her travel expenses reimbursed from the employer. The expenses include only travelling expenses and not other expense such as food, shopping, lodging etc. Travel expenses include expenses of the employee along with his/her family to any place in India , twice in a period of four calendar years. The current ongoing block is 2018-21.

Who can claim LTA/LTC?

The Income Tax Department has described who all can claim reimbursement under the word ‘family’. For the purpose of claiming LTA, the family includes – the employee’s spouse and two children, dependent parents, and dependent brothers and sisters.

How much can you claim under LTA?

Also, you cannot just go around buying the most expensive ticket, just because it will get reimbursed by your employer. Travel fares are exempt as per certain conditions subject to the amount actually incurred by you. Note that, the amount incurred on travel expenses should not exceed the amount specified in your CTC.

For instance, if you are travelling by air, the amount of tax exemption will include the amount actually spent on airfare or the price of an economy class ticket for the shortest route, whichever is lower. In case your journey mode is a train, then the amount actually spent on train fare, or first-class ticket for the shortest route, whichever is lower, will qualify for tax exemption. If you use any other mode of travel, (if the places are not connected by rail and air):

1. If recognised transport system exists, then the actual amount spent on the transport or the value for deluxe 1st class fare on such transport by the shortest route, whichever is lower will be considered. 2. If recognised transport system does not exist, then 1st Class AC fair of the shortest route will be considered, as if the journey had been done by rail or actual amount spent, whichever is lower.

Here is how you can claim LTA for tax saving:

To claim LTA for the purpose of saving tax, the employee firstly needs to fill in the details at the time of income tax proof declaration (in Form 12BB). He/she then will be needed to submit the proof of his/her travel like the boarding pass, rail tickets, travel agent’s invoice, etc. to the employer. The employer will then consider it, after deducting TDS for the subsequent months.

Keep in mind that many organizations do not provide LTA or LTC in their employee’s salary structure. Hence, check with your employer before claiming LTA or LTC.

Also note that exemption is only allowed on actual travel cost, and for domestic travels, and international travels are not included. The tax exemption under LTA or LTC can be claimed twice in a block of 4 calendar years, and not financial years. Currently, the block is 1st Jan 2018 to 31st Dec 2021.

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Leave Travel Allowance (LTA)

What is a leave travel allowance or lta.

LTA or leave travel allowance is a component of the salary that covers travel expenses while an employee is on leave. The employer provides it only for country-wide travel for the employee and family members.

Section 10(5) of the Income Tax Act of India with Rule 2B states that the LTA and other related conditions are exempted from tax. However, it is not available for employees who choose the New Tax Regime .

Consider Rohan, who receives a Leave Travel Allowance (LTA) of ₹20,000 from his employer. However, his actual travel expenses amount to only ₹15,000. In this case, Rohan’s exemption is limited to the actual amount he spent on travel, which is ₹15,000. This exemption applies to expenses directly related to travel, such as transportation costs, and does not cover other expenses like meals or accommodation.

Who is eligible to claim leave travel allowance?

Any salaried individual who has incurred travel expenses while on a planned leave is eligible to claim a leave travel allowance. It can be availed for a minimum of a 3-day leave period while traveling within the country. The reimbursement requires approval of leave from your supervisor beforehand.

The LTA exemption covers the shortest distance between two places. For air travel, the exemption is capped at the economy fare of Air India for the shortest route to the destination and doesn’t apply for foreign travel. It’s applicable for the employee and their family, limited to two children.

What is the latest block period to claim LTA exemption?

The latest block period to claim LTA exemption is 2022 to 2025 which is the 10th block year. The tax exemption can be claimed twice within four years.

Is leave travel allowance taxable?

No, the leave travel allowance is not taxable up to a limit of INR 36,000 (round trip) under the Income Tax Act, of 1961. LTA is an excellent way to save taxes for employees as long as it meets the conditions mentioned in the Act.

Note that, for employees who have chosen the New Tax Regime, leave travel allowance is taxable as per section 115 BAC of the Act (NPTR).

How can employees claim LTA benefits?

To claim benefits, employees must first check with the employer if the LTA component is available in the CTC or the salary slip. The following are the rules for claiming LTA benefits:

• Tax benefits can be claimed after filling out the required application forms and providing supporting travel documents as requested by your employer.
• Employees can claim LTA after completing the return journey of the planned trip.
• Employees must provide documents for proof of travel like travel tickets, GST receipts, etc.
• Employees can submit LTC claims for some family members with proof of travel and for the rest based on certification within the same block if desired.
• If an employee does not undertake any travel, the LTA amount gets included in your salary and becomes taxable according to your income tax slab.

What is the maximum LTA limit?

The maximum LTA limit is granted by the employer.

​​Suppose your employer provides LTA amounting to ₹30,000, and your actual travel expenses sum up to ₹25,000. In this case, you’re eligible to claim exemption only for the ₹25,000 you spent on travel, not for the entire LTA grant of ₹30,000.

Which section of the Income Tax Act allows an exemption for LTA?

Section 10(5) of the Income Tax Act of 1961 allows an exemption for LTA.

Frequently Asked Questions

1. can lta exemption be claimed on every vacation.

No, LTA exemption cannot be claimed on every vacation. It can be claimed only for domestic travel for two trips in a block period of four years.

2. How is the leave travel allowance calculated?

If the employer grants an LTA of ₹40,000, and the employee’s actual travel expenses amount to ₹25,000, only ₹25,000 will be available as an exemption. The remaining ₹15,000 will be included in taxable salary income.

3. Are there any recent updates or amendments to LTA rules?

The only recent update or amendment to LTA rules is that tax exemption cannot be claimed under the New Tax Regime.

4. Can LTA be claimed for travel expenses incurred by family members?

Yes, LTA can be claimed for travel expenses incurred by immediate family members such as spouses, dependent parents, or siblings and up to two children.

5. What happens if an employee does not utilize the full LTA amount in a year?

If an employee does not utilize the full LTA amount in a year, one journey qualified for LTA can be carried forward to the next 4-year block. To claim the unused LTA, the employee must undertake a trip within the first calendar year of the subsequent block.

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Leave Travel Allowance (LTA) – Rules, Claims, Exemption and Eligibility

Table of Contents

Leave Travel Allowance (LTA) is a financial benefit for all employees. It helps cover domestic travel expenses for two trips in a block of four financial years. The LTA amount is tax-free. It is one of the best tax-saving tools available to an employee. It is a tax exemption employers offer to their employees.

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance is an allowance employers offer their employees for domestic travel. This allowance allows employees to take a vacation where travel costs are tax-free. LTA is available for any two years within a four-year block. Employees must submit the bills and travel documents to their employer to take advantage of the LTA tax benefit.

People who can Claim Leave Travel Allowance (LTA)

Only employees and their spouses, children, dependent siblings and parents can claim LTA. This exemption does not apply to more than two of an employee’s children if they are born after October 1 1998.

Rules for Claiming LTA

The rules for claiming LTA are as follows:

• LTA does not cover international travel. Employees can only use domestic trips to make the claim.
• The employee’s family members are also allowed to use LTA to cover the cost of their travel. The family members for this purpose include spouses, up to two children(if born after October 1 1998), dependent parents and siblings.
• The employee’s salary structure must mention the LTA.
• Only the cost of travel is taken into consideration for tax exemption. No other expenses like hotel accommodation, food, or shopping qualify for this exemption.
• An employee can claim LTA two times in a block of four years.
• LTA can be claimed for travel by any mode of transport, like air, train, or road.
• If LTA isn’t claimed in a particular block of four years, it can be carried over to the next block.

Eligibility for Leave Travel Allowance (LTA)

Only the cost of travel of an employee is eligible for claiming LTA. Expenses such as local sightseeing, hotel accommodation, food, shopping, etc., are not eligible for this exemption. If the LTA provided by the employer is less than the actual cost of travelling, the exemption will be limited to the LTA amount specified by the employer rather than the actual cost.

For example, if the employer offers an LTA of Rs. 25,000 and the employee’s travel costs Rs. 35,000, an LTA exemption can only be claimed for Rs. 25,000.

LTA Exemption for Various Modes of Transportation

• Travel by air: If an employee travels by air, the exemption would be the economy class airfare by the shortest route to the travel destination.
• Travel by train:  If an employee travels by train, the exemption would be the fare of an AC first-class train ticket for the shortest route.
• Travel by other modes of transportation: If the destination is not connected by air or train, the exemption would be the fare of an AC first-class train ticket for the distance of the journey for the shortest route, whether connected by train or not.

LTA for Multi-Destination Trips

If an employee goes on vacation and visits multiple cities, in that case, the exemption will cover the cost of round-trip travel from their home city to the farthest city they visit and back. In other words, the LTA will cover the most expensive leg of their journey.

For example, suppose the employee resides in Delhi and travels to Mumbai, Goa, and Chennai for vacation. In that case, round-trip travel from Delhi to Mumbai is Rs. 4,000, from Delhi to Goa is Rs. 5,000, and from Delhi to Chennai is Rs. 7,000. In this scenario, the LTA exemption would be Rs. 7,000, which is the cost of the round-trip travel from Delhi to Chennai and back. Even though the employee visited multiple cities, the LTA will cover the expense of the farthest city visited and the return journey, which in this case is Chennai.

Claiming LTA in case of a Job Change

An LTA exemption would be available even if an employee changes their job. If the change happens within the block and there is any unutilized LTA, it can be claimed with the new employer. However, if the employee has already availed of the LTA, it would not be allowed by their new employer.

Unclaimed LTA

LTA exemption is available for two trips in a block of four years. However, if the employee does not take two trips within the four-year block, only one unutilized LTA is carried forward to the next block of years. However, to claim the unutilized LTA, the employee must take a trip in the first calendar year of the next block; otherwise, it will expire.

LTA Exemption for Vacation on Holiday

Under the Income Tax Act 1961, the LTA exemption is only allowed when an employee applies for a leave from work and then travels on vacation. Employees who take their vacation on official holidays or weekends cannot claim LTA.

Documents Required for Claiming LTA

Documents like the LTA form and proof of travel, such as tickets and boarding passes, are required to claim LTA.

Procedure to Claim LTA

Every employer announces the due date before which employees can claim LTA and may ask employees to submit proof of travel, such as tickets, boarding passes, invoices provided by travel agents, etc., along with the mandatory declaration. Though employers don’t need to collect proof of travel, it is always prudent for employees to keep copies for their records and submit them to the employer based on the company’s LTA policy or to the tax authorities on demand.

It is crucial for employees to meticulously document their travels, be aware of submission deadlines, and stay up to date with any changes in regulations. Understanding LTA  provides potential tax savings and the opportunity to explore new destinations. As you embark on your next adventure, confidently navigate the roads, armed with the understanding of how to make the most of your Leave Travel Allowance. Safe travels!

FAQs about Leave Travel Allowance (LTA)

What does leave travel allowance cover.

Leave Travel Allowance covers the travel expenses incurred during a trip.

How many times can an employee claim Leave Travel Allowance?

An employee can claim LTA only twice in a block of four years.

Is international travel covered under Leave Travel Allowance?

No, international travel is not covered under Leave Travel Allowance.

Which section of the Income Tax Act allows an exemption for LTA?

Section 10 (5) of the Income Tax Act, 1961 allows LTA exemption.

If an employee’s parents-in-law travel with him, would the travel costs for the parents-in-law be claimed as an exemption?

No, LTA exemption cannot be claimed for travel costs for the parents-in-law of an employee.

Can only the travel costs of the family members be claimed as LTA if the employee does not travel?

No LTA exemption would be allowed if the employee does not travel, even if their family members travel.

What would happen if the employee did not travel in a block of four years?

LTA exemption is prohibited if the employee does not travel in a block for four years. However, one unutilized LTA can be carried forward to the next block.

Can I claim an LTA exemption twice in one financial year?

No, only one LTA exemption can be claimed in one financial year.

What is the latest block period to claim LTA exemption?

The latest block period to claim LTA exemption is from January 1 2022, until December 31 2025.

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Leave Travel Allowance (LTA): Rules, Claim, Exemption & Benefits

What is a leave travel allowance?

What is a leave travel allowance exemption, what are the conditions for claiming this exemption.

• You, as the claimant, are required to cover the cost of the journey you are planning to take. After you have covered the cost, only then you are eligible to claim the exemption.
• The location where you are planning to travel must be within the Indian borders. For example, if you are planning to travel to Lakshadweep , you are eligible for the LTA exemption. However, if you are planning to travel outside of India, you are not eligible for the exemption.
• You can claim the exemption if you are travelling alone or with your family. If you are travelling with your family, do keep in mind that the exemption covers only two children. Also, if the children are born before 1 st October 1998, they are excluded from the exemption.

How to claim the exemption?

• Boarding pass if travelling by aeroplane
• Tickets if travelling by train or bus
• Receipts for the same
• Form pertaining to the claiming of the exemption

How beneficial is this exemption?

Things to remember when travelling.

• Always safeguard your travel documents to enjoy hassle-free travel.
• Purchase travel insurance before the beginning of your journey.
• Only pack those things which are necessary and avoid overpacking.
• Carry fewer valuables, if possible.
• Always declare all your belongings to the authorities to avoid being fined.

Why travel insurance is a must?

• Financial coverage for loss of baggage and valuables
• Provision of temporary travel documents
• Coverage for medical treatment and hospitalisation
• Evacuation flights during emergencies

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Here’s why you should claim LTA and how to do it

Leave travel insurance (lta) can be claimed for 2 trips in a block of 4 calendar years..

• Claims can be made only for actual journeys to claim the tax exemption.
• Only domestic travel (within India) is considered for exemption.
• The exemption for travel is for the employee travelling alone or with his family. ‘Family’ includes the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee.
• An exemption is not available for more than two children of an employee born after October 1, 1998. Children born on the specified date do not have any restriction.
• The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. The LTA amount is subject to the salary structure provided by the employer.
• One can claim LTA only twice in a block of four years. In case of no claim, it can be carried forward to the next block.
• Only the amount paid for travel expenses under LTA is eligible for exemption. For instance, if LTA granted by the employer is Rs 40,000 and the actual cost of travel is Rs 30,000, then only Rs 30,000 will be eligible for tax exemption and the balance Rs 10,000 will be included in the taxable salary income.
• Individuals who have opted for the new tax regime cannot claim LTA.
• Travel by air - Exemption is allowed for ticket fares of a national airline's economy class when the destination is connected by air.
• Travel by train – If the destination is also connected by trains, the exemption is allowed for AC first-class tickets.
• Travel by other modes of transport – an amount equivalent to first-class, deluxe, or AC first-class fare, whichever is lower, can be claimed for exemption under LTA if the destination is not connected by either rail or air.
• The LTA deductions are considered only for the shortest route to the destination and back.

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Leave Travel Allowance (LTA) under Section 10(5) of Income Tax Act, 1961

Introduction: Leave Travel Allowance (LTA) under Section 10(5) of the Income Tax Act serves as a significant employee benefit. This article provides a comprehensive understanding of LTA, exploring its particulars, the State Bank of India vs. ACIT judgment, and practical aspects for claimants.

Leave Travel Allowance (LTA) is an allowance provided by the employer to the employee either in the form of reimbursement of travel expenses incurred by the employee OR in the form of Fixed allowance. Hence where an individual is receiving LTA then he can claim exemption u/s 10(5) of the Income tax Act.

Explanation:

• Family in relation to an individual means-

(i) Spouse and two surviving children of the individual. ( child includes adopted child or step child ) ( further after one child if there is twins or triple , it still be counted as one )

(ii) Parent, brother or sister of the individual wholly or mainly dependent on the individual

Conclusion: Navigating the intricacies of LTA under Section 10(5) demands clarity. This article aims to decode the complexities, offering insights into exemptions, key judgments, and practical considerations for individuals seeking to claim LTA benefits.

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Name: CA GEETANJALI PANDEY

Qualification: ca in practice, company: geetanjali pandey & co, location: lucknow, uttar pradesh, india, member since: 26 apr 2020 | total posts: 40, my published posts, join taxguru’s network for latest updates on income tax, gst, company law, corporate laws and other related subjects..

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