Everything about Leave Travel Allowance Explained

The Tax Exemption is a statutory rule that allows monetary exclusion or reduction of the total taxable income. One such exemption available and utilised by employees is Leave Travel Allowance.

Curious to know about Leave Travel Allowance? Read along!

Leave Travel Allowance refers to a kind of allowance that employers provide to employees for travel. This allowance covers domestic travel costs when employees are on leave from work.

Now that individuals know what is LTA in salary, let’s focus on the exemption for FY 2023-24, a list of expenses exempted under LTA and other details., a list of expenses exempted under LTA and other details.

Leave Travel Allowance is not a usual component of the salary structure. Hence, before claiming Leave Travel Allowance, individuals must check the pay structure.

The Leave Travel Allowance provided by employers may vary from one to another. Eligible individuals can claim LTA by submitting required documents to employers.

All companies announce a particular claiming date for Leave Travel Allowance where individuals have to fill up a form, attach essential documents and send it to the Accounts or Human Resource Team.

Remember, employees need to claim for Leave Travel Allowance before employers start calculating tax liability.

Wondering what the proofs are essential for LTA? Read along!

To claim Leave Travel Allowance, individuals have to submit proof of travel such as:

• Flight tickets
•  Boarding pass
• Duty pass
•  Bills from travel agent
• Other documents demanded by an employer or evaluating officer. 

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One can easily calculate Leave Travel Allowance. However, they must know certain things before doing it.

As stated earlier, employees can claim LTA for two travels in a block of 4 years. There is a difference between financial years and block years, and the Income Tax Department decides the latter.

The current block year is between 1st January 2022 and 31st December 2024. Here, employees can claim for two journeys that happened between 2022 and 2024.

However, if employees have not placed any claims during these block years, but claimed in the next block, they can move the allowance in the first year of the next block but not in the following next block. 

Remember, only travel costs are permissible for LTA, not food or other costs.

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The Income Tax Section 10(5) and Rule 2B covers tax exemption and other details related to tax exemption.

Below is a list of expenses that are allowed as exemption under LTA:

• Travel by Air- The airfare of economy class by the shortest route or the actual expense incurred by an employee (whichever is lesser) is available for tax exemption. 
• Travel by Rail- The rail fare of AC 1st class by the shortest route or the actual expense by an employee (whichever is lesser) is available for tax exemption. 

Besides, there are other situations that are covered under the exemption  list of Leave Travel Allowance . These are as follows:

• In case the place of origin and destination are not linked by rail, but the journey is continued by other modes of transport.
• In case the place of origin and destination are not linked by rail (partly or fully) and not connected by other known Public Transport systems (PTs).
• In case the place of origin and destination are not linked by rail (partly or fully) but are connected by other known PTs.

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In an earlier section, we have focused on a list of LTA exemptions. Now, let’s check some of its particulars, i.e. applicable deductions. Read along!

On the basis of salary structure, employees can claim a certain exemption limit in LTA. The following conditions come under LTA exemption:

• While travelling by air, employees can claim an exemption for ticket costs only of a national airline’s economy class.
• When travelling by train, employees can claim an exemption for AC 1st class tickets.
• While travelling by other modes of transportation (except air or railway), employees can claim exemption. Here, exemptions are available for the charges that are the same as first-class, AC 1st class or deluxe and for the lesser amount among the given options.    
• The LTA deductions are applicable only for the journey of the shortest tour i.e. place of and return. Here, if a salaried employee receives ₹ 30,000, he/she can claim for only ₹ 20,000. The remaining ₹ 10,000 will be considered income and will be taxed as per the applicable tax slab rates.

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Following is a list of conditions under which tax exemption is not available while availing Leave Travel Allowance.

• LTA is not available on food expenses incurred while travelling .
• International travel is not permissible for exemption.
• Exemption under LTA is not offered to salaried employees who have more than two children and who are  born after October 1, 1998.
• Salaried individuals cannot claim to Leave Travel Allowance more than two times in a block of 4 years.

Note: If salaried individuals have not claimed Leave Travel Allowance in a specific block year, they can carry it forward to the next block and use it in the first year of the next block itself.

Read the above-mentioned details carefully and understand Leave Travel Allowance to enjoy the benefits offered under it. But remember, this allowance is not applicable for employees who wish to follow the new tax regime.

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