There are many Allowances as per Income Tax Act 1961, which reduces your taxable income and eventually it lowers your Tax burden.
One of that is “Leave Travel Allowance”, which helps reduce the tax burden; in case you are travelling within India, it is also named as Leave Travel Concession. LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination of service.
It is exempted as per Section 10 (5). There are following conditions to be met, to claim this exemption:
- Travel has to be within India, only Domestic Travel
- EL/PL to be availed to Travel
- LTA Exemption can be claimed, only after your Travel has occurred. Not before the Travel Date.
- Employee can travel alone or with his family, where ‘family’ means the employee’s spouse, children and wholly or mainly dependent parents, brothers, and sisters of the employee.
As per the IT Act, 1961, there is no upper capping for the LTA. However, the organizations define the eligible capping as per their internal policy, basis the designation or bands. However, it cannot exceed the Actual Travel cost.
*LTA Exemption can be claimed only for 2 Journeys in a block of 4 years. Current block year is 2018-21.
In my Next blog on LTA, we will cover the following Topics:
Carryover of Unclaimed LTA
Carryover of Journeys Exemption to next Year
LTA in case of Air Travel, Train, Taxi Etc
Multi Destination Journey
LTA Exemption on Holidays