Leave Travel Allowance: What is it? Tax Exemptions and Condition to claim
What is LTA?
Leave Travel Allowance (LTA) is an allowance paid by employers to their employees when they are on leave and travelling alone or with family within India. Subject to certain conditions, leave travel allowance is tax free in the hands of the employees.
Tax Exemption on Leave Travel Allowance
Section 10(5) of the Income Tax Act along with and Rule 2B have prescribed the conditions and amount of exempt leave travel allowance. Subject to these conditions, leave travel allowance is tax free in the hands of the employees.
Conditions to claim exemption on Leave Travel Allowance
- Leave travel allowance should be part of employees salary i.e employer pays leave travel allowance to an employee as part of his/her salary
- An exemption is allowed for expenses actually incurred by the employee and his/her family for the purpose of travel in India.
- Family for purpose of leave travel allowance includes:
- Spouse and children
- Parents, brothers, and sisters who are wholly or mostly dependent on employee.
- LTA covers only cost of travel for the trip (travel through rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
- Leave Travel Allowance covers only domestic travel and does not cover international travel
- An exemption is available only for two trips in a block of four calendar years. Current block for leave travel is 2014 to 2017 i.e 1st April 2014 till 31st March 2017
- 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 next block.
How to claim exemption on Leave Travel Allowance?
Employees can claim LTA exemption by submitting details in Form-12BB. With the newly introduced Form-12BB, employees can provide detail of their travel during the financial year. They are also required to submit proof in support of their claim. Employees can submit boarding passes, air tickets, train tickets, invoices of travel agent etc. as a documentary proof to their employers.
Frequently Asked Questions
1. Can I claim LTA on internation travel?
LTA can be claimed only for domestic travel. You can only claim LTA if Employer provides it as part of your salary structure. You can claim exemption on LTA under section 10.
2. Can I claim LTA every year?
You can claim LTA only twice in block of 4 years. Current block of four years is 2014-2017. However you can claim LTA reimbursement every year from your employer.
3. Do I have to submit any document proof to claim LTA?
Employees do not have to submit any proof to Income Tax Department. However employees are advised to maintain proofs such as flight tickets, invoice from travel agent, passes etc..