Most of the salaried individuals enjoy the benefits of Leave Travel Allowance (LTA) as part of their annual packages. However, due to the shift from the Old Tax Regime to the New Tax Regime, many are not aware of the changes concerning LTA, such as whether it is a part of the New Tax Regime or not.
Read more to find out factual information about LTA and its relation to the New Tax Regime.
What Is A Leave Travel Allowance?
A Leave Travel Allowance (LTA) is a component of an employee’s annual package given by the employer. It covers travel expenses of the employee when they travel within India. LTA is an essential part of an employee’s salary package as it helps them plan a comfortable and fancy vacation and take a rejuvenating break from the daily hustle and bustle.
Read More: IRCTC Tourism Package
Important Points About LTA & The New Tax Regime
There are certain significant points that one should know about Leave Travel Allowances and their relation with the present tax regime.
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Under the New Tax Regime , any employee who has LTA cannot opt for LTA tax exemption, as it is not covered under the present tax regime.
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As per the Income Tax Rules, if an individual is getting the benefits of Travel Allowance as part of their Cost-to-Company, they are required to pay the LTA tax exemption on the same, as LTA remains taxable.
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Employees with LTA can only apply for LTA tax exemption under the Old Tax Regime for FY 2025-26. Please note that such an exemption will only be given to people on condition of fulfilling all the requirements prescribed in the Income Tax Act of 1961.
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LTA exemption is given twice in a 4-year block; hence, the taxpayer can travel and enjoy the benefits of the exemption for a maximum of two trips.
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The benefits of LTA tax exemption are the same for both, the government sector employees and the private sector employees.
Eligible Conditions To File For LTA Tax Exemption Under The Old Tax Regime
To opt for tax exemption in LTA, one needs to fulfil all the conditions mentioned in the Income Tax Act of 1961. All those are mentioned below in detailed points for one’s better understanding:
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The employee must have Leave Travel Allowance in their annual packages from the employer.
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To claim the tax exemption on LTA, employees are required to submit all the related bills and travel documents as proof to their respective employers before a given date.
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Employees cannot apply for tax exemption on LTA if they are travelling internationally.
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LTA tax exemption is for the family members of the employees as well, such as spouse, children, parents, and siblings.
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Tax exemption on LTA covers only the costs of transportation by air, train, or road. It does not cover the expenses of accommodation or food.
Conclusion
Employees searching for tax exemption on Leave Travel Allowance will not be able to find it under the New Tax Regime, however, they can find it under the coverage of the Old Tax Regime. All those individuals who have LTA as part of their annual packages need to keep themselves educated about the tax exemptions on the same, so that they can plan their trips accordingly.
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