Demystifying LTA exemption

Leave Travel Allowance is granted to employees to meet cost of travel on leave to any place in India. As we approach the end of the financial year, many of us are busy arranging for travel bills to be submitted to our employer in order to claim Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) exemption and some of us are even planning a vacation. The new four year block for LTA has just started, if you have not availed the LTA/LTC benefit for the previous block, this may be the time for you to claim your entitled LTA benefit.

LTA Income Tax benefit

LTA or LTC is exempted under section 10(5) as per detail given below :

  • LTA/LTC received from employer to proceed on leave to any place in India for himself and his family is exempted.
  • LTA/ LTC received from employer or former employer received in connection with proceeding to any place in India after retirement/termination for himself and his family is also exempted
  • The exemption is allowed only if an actual expense has been incurred.

Exemption is allowed on two journeys in block of four years. The block from 2006–2009 has just ended and the new four year block applicable from January 1, 2010 to December 31, 2013. By the way, unlike other income tax provisions, LTA block of four (4) years are based on calendar year and not the financial year.

Use our Income Tax Calculator for financial year 2009-10 to know how much you can personally save on income tax if you claim LTA exemption.

Carry forward LTA exemption to next block

If you have not availed any LTA/LTC exemption in last block of four years (single or both) than you can carry forward one exemption in first year of next block of four years. This means if you can perform journey in first year of the next four year block. This carry forward will have no impact on your entitled two journeys of the next LTA/LTC block.

Meaning of Family for LTA exemption

For the purpose of claiming LTA/LTC exemption, your family would include your spouse, children, parents, brothers and sisters who are wholly or mainly dependent on you.

There is another caveat regarding inclusion of children for LTA/LTC exemption. The exemption is allowed only for two children if born after October 1, 1998. This restriction does not apply to Twins or multiple births after birth of first child and if your children were born before October 1, 1998.

Entitled amount for LTA Exemption

The amount of exemption entitled to be claimed under LAT/LTC benefit depends on the mode of transport you take for travel. Further, the exemption is capped to actual expenses incurred by you. This means you can claim exemption only if you have actually performed the journey.

If you travel by Air, then the economy Air fair of national carrier by the shortest route or the amount spent which ever is less is exempted. If you choose to travel by train then you are entitled to claim exemption of amount equivalent to A.C. first class rail fare by shortest route or amount spent which ever is less.

When the place of origin and place of destination of journey is connected by rail but journey you travel by other mode of transport, then also A.C. first class rail fare by shortest route or amount spent by you for traveling which ever is less is entitled for exemption.

If the place of origin and place of destination is not connected by rail partly or fully, but is connected by other recognized public transport system, then you can claim exemption of first class or deluxe class fare by shortest route or amount spent which ever is less.

It is worthwhile to note here that exemption is allowed only for travel fare. Other expenses such as amount spent on local conveyance, taxi charges, boarding and lodging, etc are not covered under LTA/LTC for exemption.

Since it is the calendar year and not the financial year, it will be from January 1, 2002 to December 31, 2005.

20 thoughts on “Demystifying LTA exemption”

  1. Hi,

    Pls help me in this matter

    I need to know that if I travel in Jan-Mar’10 , LTA exemption will be considered for FY 09-10 or 10-11

  2. A very nice read Shweta 🙂

    This LTA and other tax components are giving me sleepless nights. Every year this time of the year I make a commitment that this year atleast I am going to submit all the proofs/claims on time, then same time next year, I break the commitment and the story goes on… 😉

  3. Hi Shweta, Jsut wanted to confirm is the new block from 1st Jan 2010 to 31st Dec 2013 or is it 31st Dec 2014(as you have put now)?

  4. Hi Shwetha,
    plz let me know how much we can pay LTA from employer end and how much woould be the exemption from the employees end.
    Kidly clarify.

  5. Expenditure incurred on travel in 2009 but proofs not submitted to the company till Mar 31, 2010. In this case, can that expenditure be carried forward and claimed FY 2011 from the company? If not, then can it still be claimed as refund in the IT return for the Fy ending Mar 31, 2010? Thanks a ton for your help.

    • Ankit, you need to check with your company if they can allow reimursement on bills pertaining to FY-2009-10 in FY-2010-11. If they can recognize it as a FY-2009-10 then fine, else you can carry forward it and provide bills of the current year.

  6. I am workning for a software company. If I want to claim LTA, my employer is telling me that I have to wait till March'2011 to get my LTA amount even I travelled in the month of April'2010.
    Is this the rule from GOVT?

    • Hi Rajesh,

      no there is no such mandate from the Govt. on this, however different employers have their own policies regarding LTA reimbursements. For newly joined employees, employers some time have a time duration before which the employee can not claim the LTA. Most of them make it mandatory for employee to take around 5 days of Privilege Leave, to claim LTA. I suggest that you clarify the policy regarding LTA reimbursements with the HR of your company.

  7. If i have travelled from A to E. But in between i have visited to B, C and D. The travelling expenses of all the points will be covered. or they will allow the fare from A to E only (by the shortest distance as they say).

    • @ Rahul : u are eligible for LTA exemption only for the fare from A to E i.e shortest distance. But in case, A to E has no direct access then intermediate points will also be covered i.e B, C and D points and you will be eligible for claiming exemption in respect to those junctions also.

  8. My employer gives me 70 K as LTA and this amount is too high considering only travel bill ( Air/ Rail/Road ) are to be included . Even if i travel twice in a year by air , would nnot spend more than 20-25k ..Can you suggest me how should i save tax on LTA.

  9. Thanks for presenting an outstanding article. I read your thoughts and I just find it very useful and excellent. Wonderful information. I am very glad to see such information, which I was searching for a long time.

  10. Hi Swetha,

    I travelled in May 2010, but couldn’t able to claim LTA in that year ie Jan 2010 to Dec 2010. Can I claim that amount this year ie Jan 2011 to Dec 2011?

  11. This is true that Exemption is allowed on two journeys in block of four years. The block from 2006–2009 has just ended and the new four year block applicable from January 1, 2010 .

  12. I am working in Indian software company and working out of India since last one year. I am receiving Indian Salary in Indian bank Account with one component as LTA. I am planning to travel to India for Vacation. Can I claim the travel expenses from Foreign country TO Inida as LTA exemption? __"The act says Travel to any place in India but does not specifically says about travel should be from India"__

  13. Hi,
    I declared my LTA as INR 60000 in April 2011.
    In October decided not to go for LTA updated my IT Declaration accordingly as LTA : NIL

    I expect my employer to pay Gross Amount INR 35000 as part of salary in October. (My calculation is 60000/12= 5000 x 7 (number of months April to October) and from October to April it is INR 5000 per month.

    My employer is calculating this as
    60000/6 = 10000 as Gross amount from October salary to April salary.

    In this case part of salary blocked.

    Please let me know how this should be as per the policy?

    Thanks
    Reethu

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