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FAQ’s for claiming Leave Travel Allowance (LTA) as per Income Tax Rules
LTA is the benefit given by the employer to employees. While employee would enjoy the trip, they would also get benefitted with income tax benefit received through LTA. What is Leave Travel Allowance (LTA)? What are the income tax rules pertaining to LTA? In this article I would detail about LTA and some of the frequently asked questions about LTA.
Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. An LTA is the remuneration paid by an employer for Employee’s travel in the country, when he is on leave with the family or alone. LTA amount is tax free. UPDATE OF INFORMATION TO LTA. With the implementation of LTA's e-Services@ONE.MOTORING from, LTA has done away with paper VPC. Upon approving the application, URA will transmit VPC information to LTA by the next working day to facilitate your transaction(s) with LTA. ROLLBACK FOR FAILED TRANSACTIONS.
What is Leave Travel Allowance (LTA)?
LTA (Leave Travel Allowance), is a benefit provided by almost all employers to their employees which provide income tax benefit. One can claim LTA for two times in a block of 4 years. Employees would take leave, enjoy their travel and claim this as reimbursement where income tax is not deducted. However, there are certain Income Tax guidelines to be followed to claim LTA.
Also Read: How to check employee provide fund (EPF) online?
20 FAQ’s for claiming Leave Travel Allowance (LTA) as per Income Tax Rules
1) What is the amount that can be claimed for LTA?
LTA is a benefit provided by the employer. It could be any amount starting from Rs 20,000 and above. The amount would be decided by the employer based on the grade and seniority of the employee.
2) When an employee can claim LTA?
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An employee can claim LTA for 2 years in a block of 4 block years. Means, they can claim first time in year-1 and year-2 and second time in year-3 and year-4.
3) What is a block year in LTA?
Income tax rules define block year for claiming LTA. Previously it was 2010-2013. Currently it is 2014-2017. Means you can claim first LTA in 2014 and 2015 and second LTA in 2016 and 2017.
4) How a year is defined by IT rules for claiming LTA?
For claiming LTA, it is a calendar year and not financial year. For e.g. 2015 means 1-Jan-2015 to 31-Dec-2015. 2016 means 1-Jan-2016 to 31-Dec-2016. So current block year (4 years) starts from 1-Jan-2014 and ends at 31-Dec-2017.
5) Which IT section exempts LTA amount?
LTA amount claimed as per IT rules is exempted u/s 10 (5) of Income Tax Act.
6) How many trips an employee is eligible to claim for claiming LTA?
The employee can claim LTA for only one trip in a year. One cannot claim multiple trips in a year to claim LTA.
7) If an employee does one trip, but visits multiple places, is he eligible to claim LTA?
Income tax rule indicates that LTA can be claimed for the shortest distance between the starting point and farthest point. In between, if there are more places to visit, you can do that.
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8) Who is eligible to travel along with employee to get LTA benefit?
The employee can take his spouse, kids and dependant parents, dependent brother or sister as part of travel to claim LTA benefit. He cannot take his friends / girlfriend (J) to get LTA benefit.
9) How many kids are eligible to travel to get LTA benefit?
2 kids are eligible for travel to get LTA benefit. In case there is triplet kid, due to twins, such twins would be considered as one kid for this purpose.
10) Can I claim LTA by travelling abroad trip?
LTA can be claimed for travel taken within India. You cannot claim foreign trip expenses for LTA benefit.
11) What expenses can be claimed under LTA Benefit?
LTA can be claimed only for ticket cost from starting point to the destination point and vice versa. One cannot claim food expenses, lodging expenses and other miscellaneous expenses under LTA claim.
12) What mode of travel is eligible for claiming LTA?
- In case of air travel, economy class is eligible.
- In case of train travel, up to first AC is eligible.
- In case of road transport, rented vehicle / bus of any kind is eligible to claim LTA benefit.
13) In case spouse is working and spouse is also eligible for LTA, how LTA claim would work?
There is no change in IT rules in case spouse is working. However, smart way of claiming LTA is, one can claim in 1st year and spouse can claim in 2nd year. Similarly, one can claim in 3rd year and spouse can claim in 4th year. This way, they can enjoy 4 trips and also get the LTA tax benefit for the entire block year.
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14) Can we carry forward unclaimed LTA?
Yes. An employee can carry forward one trip to next block year. Means in a 4 block years, he can claim one trip and one trip he can carry forward to the next block year. During the next block year, instead of 2 trips, they can undertake 3 trips and claim LTA benefit. However, this has to be communicated to an employer so that they can make provisions in their books.
15) If an employee moves from one company to another company, how LTA can be claimed?
There are no specific rules if an employee moves from one company to another company. They need to go by the same rules and claim 2 claims in a block of 4 years.
16) If en employee travel at the end of the year and returns from a trip which falls beyond 31st Dec, how does it work?
In such case, employee need to consider starting date as a basis and claim for that calendar year.
17) If en employee travel at the end of the block year and returns from trip after 31st Dec which falls in a different block year, how does it work?
Block year for the current LTA period is from 1-Jan-2014 to 31-Dec-2017. Assume that you want to claim your 2nd LTA amount and planned your trip from say 25th Dec 2017 to 5th Jan 2018. Since 1-Jan-2018 onwards is a different block period, you can still claim this trip under 2014-2017 block period.
18) My employer does not provide LTA benefit, can I make a trip and claim LTA while filing IT Returns?
LTA is a benefit provided by the employer. This is paid as reimbursement to you when you claim as per IT Rules. In case your employer does not provide this benefit, there is no way you can claim LTA. You cannot claim this while filing IT Returns.
19) I missed to submit my first LTA claim in a block year. Can I submit 2 LTA claims in a block year later?
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As per IT Rules, an employee need to claim 2 trips LTA in a block of 4 years. However, if you have missed to claim in first 2 years, you need to indicate this to your employer, so that they can carry forward to subsequent 2 years of the same block year. You can later submit the bill pertaining to the first 2 years (bill date should indicate that) and claim it. However, you cannot claim 2 trips expenses in subsequent 2 years of a block period (with bill dates pertaining to 3rd and 4th year of a block period).
Also Read: How to get Rs 10 Lakhs and above a tax free Income and pay Zero Tax?
20) Do I need to submit a single bill for our trip or multiple bills would be accepted for LTA?
LTA benefit is given for a trip. Means, one family is travelling. Ideally, there would be one bill. However, there are cases where multiple bills would be received for a single trip (for airfare bills, where a family member agreed to join later and the booking was made later, but travel date is same of the remaining members). In such case, these are agreed by employers. It would be better to check with employer in such circumstances before proceeding further.
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20 FAQ’s for claiming Leave Travel Allowance (LTA) as per Income Tax Rules
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