Leave Travel Allowance | Tax Savings for travelling?

Leave Travel Allowance (LTA) is a beneficial provision that helps employees travel with their families within India without having to worry about major expenses. LTA helps to reduce taxable income while encouraging domestic travel. This article focuses on understanding LTA and learning how to claim the allowance.  

What Is LTA?

LTA full form stands for Leave Travel Allowance. It is an allowance given by employers to the employees and covers the travel expenses when employees go on vacation. This benefit is a part of the salary structure of the employee.

Leave Travel Allowance was introduced to reduce the taxable income under Section 10(5). It covers costs for travel by air, train, or public transport within the country. 

What Are The LTA Exemptions?

Employees will be exempted from payment of tax under Section 10(5). The exemption is allowed on two journeys in a block period of four years. 

Employees must keep valid proof of all the travel bills and documents to claim these benefits.

LTA Exemption Details

• The maximum amount that can be claimed is limited to the total travel expenses.

• An employee can claim these benefits twice in four years.

• Only allowed for domestic journeys.

• Air fair claim: it can be claimed in two ways, either the actual amount spent or the fair of the shortest route to the destination, whichever is lower.

• Train fair claim: it can be claimed in two ways, either the expense of a first-class AC ticket for the shortest route or the actual amount spent, whichever is lower.

• If other modes of transport are used, then only the recognised mode of transport will be allowed for claim. For instance, first class bus ticket.

How To Check If You Are Eligible?

To be eligible for the claim of Leave Travel Allowance:

•  One must be a salaried person.

•  The journey must be within the country for vacation purposes.

•  The vacation must be with the employee's family or alone.

• Exemption for only two kids born after October 1998.

• LTA must be a part of the employees salary structure.

Shalini Jain, Tax Partner, EY India, says, "An employed person having LTA as a component specified in their salary structure may claim an exemption under Section 10(5) of the Income-tax Act, 1961 (Act)..."

How To Claim LTA?

1. Plan the journey within the country.

2. Inform the employer about the trip and the days of absence.

3. Submit proof of the trip to the employer.

4. Fill out the LTA claim form.

5. Submit the form.

Required Documents To Submit To The Employer

Remember that only the actual amount spent can be claimed.

• Travel tickets

• Boarding passes

• Hotel accommodations

Special Cases

1. Retired employees can claim their LTA post-retirement. They will be given a specific period between which they can travel and claim the LTA.

2. Terminated employees can only claim their LTA before their termination period.

3. If your LTA goes unclaimed, then one can claim it during the first year of the next four-year block.

You know you can now save upto Rs 50000 in tax with the help of LTA. How? Watch this detail video by Jaagruk Bharat.

Conclusion 

Leave Travel Allowance is a great way to cover all the major travel expenses within India. It is a great way for employees to go on a vacation alone or with their families. LTA promotes family travel while reducing taxable income. 

To learn more about LTA, click here.