LTA (Leave Travel Allowance) is an allowance paid by employers to their employees when they are on leave and traveling alone or with family within India. Subject to certain conditions, it is tax-free in the hands of the employees.
What is LTA – Leave Travel Allowance?
LTA is an allowance received by the employee from his employer for travelling on leave. There are many situations that need to be considered before planning a trip for the purpose of claiming LTA.
Conditions to Claim LTA Exemption
- Leave travel allowance should be part of employees Salary i.e employer pays an allowance to an employee as part of his/her salary
- An exemption is applicable for incurred expenses 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.
- It 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. The current block for leave travel is 2018 to 2021.
- 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.
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.
Eligibility to Claim LTA
The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accomodation, food, etc are eligible for this exemption. It is also limited to the LTA provided by the employer.
How to Claim Exemption on Leave Travel Allowance?
Employees can claim Leave Travel Allowance 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 should also submit the proof in support of their claim. Employees can submit boarding passes, air tickets, train tickets, invoices of 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 structure. You can claim an exemption on LTA under section 10.
No. You can claim LTA only twice in a block of 4 years. The current block of four years is 2018-2021. However, you can claim LTA reimbursement every year from your employer.
Employees do not have to submit any proof to Income Tax Department while filing ITR on IT Portal. However, employees are advised to maintain proofs such as flight tickets, invoices from travel agents, passes, etc.
Employees can know 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 HRA. However, salaried needs to file ITR-2 if income is more than Rs. 50,00,000.