Leave Travel Allowance (2)

Leave Travel Allowance (2)

This is the 2nd LTA Blog, here is the link for 1st LTA Blog : https://www.crafthr.in/2020/05/10/leave-travel-allowance/

LTA exemption cannot be claimed at the time of ITR filing, the exemption is limited to LTA provided by the employer.

LTA exemption is available only for travel and not for Boarding, Lodging, local conveyance, sightseeing, food, etc.

Carryover of Unclaimed LTA

Some Employers also allow the unclaimed LTA amount to be carried over to next Financial Year, whereas some employers pay back the unclaimed LTA amount as taxable component, in same financial year, either at the year-end or on monthly basis.

Carryover of Journeys Exemption to next Year

In case if any employee has not availed 1 or 2 journey in any block year, he/she is allowed to carryover such exemption to the 1st calendar year of the next block year

LTA in case of Air Travel, Train, Taxi Etc

In case of your source and destinations are not connected by any recognized public transport – it will be presumed that the journey had been performed by rail and the exemption amount cannot exceed the amount equivalent to the AC 1st Class rail fare for shortest route

In case of your source and destination are not connected by rail but by other recognized public transport – Exemption amount is restricted to 1st class or deluxe class fare for the shortest route

In case of your source and destination are connected by rail – exemption amount cannot exceed the amount equivalent to the AC 1st Class rail fare for shortest route

In case of journey from source to destination is performed by Air – exemption amount is restricted to the Economy fair of Indian Airlines or Air India for the shortest route

Multi Destination Journey

In case of Multi Destination Journey, exemption is always considered for the shortest route from source to destination (Place of origin to the farthest place).

LTA Exemption on Holidays

As per IT Act 1961, LTA exemption cannot be availed for the journey performed during Holidays and some organizations do follow the rules strictly and reject the claims.

Did you know the followings about Offer / Appointment Letter?

Did you know the followings about Offer / Appointment Letter?

If an appointment letter provides Gratuity in the monthly CTC (Cost to the Company), an employee can claim gratuity even when he has not completed 5 years of service.

Unless in Appointment Letter details are provided about probation period, he/she will be treated as regular employees.

When an appointment letter does not provide about the retirement age, such employee can continue to work as long as he is physically and mentally fit to work.

If there is no condition in the Appointment Letter about transfer of an employee from one place to another, such an employee cannot be transferred.

In the absence of any condition in the appointment letter about quantum suspension allowance, such a suspended employee will be entitled to full wages during his suspension.

In the Appointment letter, if there is no such condition that an employee can be transferred to any other office or branch or unit, such employee cannot be legally transferred to any branch or unit, which has been set up after the employee has been conducted in the employment.

Leave Travel Allowance (2)

Leave Travel Allowance

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:

  1. Travel has to be within India, only Domestic Travel
  2. EL/PL to be availed to Travel
  3. LTA Exemption can be claimed, only after your Travel has occurred. Not before the Travel Date.
  4. 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