How is my LTA Taxed?

by Manshu on February 11, 2007

in Tax

Leave Travel Assistance (LTA) has got a tax treatment which is quite different from all the other type of allowances and perquisites that you get. And that’s the primary reason it is the one that gets people confused more often than not.
The following points need to be kept in mind while taking the LTA or producing bills for it to get  LTA Exemption:

Can We Claim LTA Every Year?

One of the most common questions about LTA is whether it can be claimed every year or not? The answer is Yes – you can claim LTA every year, but you will not be able to claim LTA exemption ever year.

Other Points About Tax On LTA

  1. If you do not wish to claim LTA in one particular year you can have your employer carry forward your LTA for the next year.
  2. For getting LTA tax exempt you will have to produce bills, but you can’t get your LTA exempt every year.
  3. You can get your LTA exempt twice in a block of four years. Right now the block that is relevant is 2006-2009. This block is decided by the Government so does not have a bearing on when you start your job and also these blocks are calendar years and not financial years.
  4. The bills can be air, rail or even a private rental company however the exemption is only for domestic travel so an international ticket won’t do.
  5. The bills have to be for a journey that has been undertaken when you are on leave and should be for you and your family that is spouse, children and dependant parents, brothers and sisters. Its obvious that your family can’t claim the exemption if you have not accompanied them.
  6. If you and your wife both get LTA – both of you can’t claim exemption for the same travel but you can avail exemption independently for different travels. So effectively between the two of you, you can claim exemptions four times in four years.
  7. If for some reason you fail to claim LTA exemption in the bucket of four years – you still have the option to claim exemption in the first year of the next block.
  8. Only travel bills can be used for LTA exemption, so a hotel bill can’t be produced for claiming LTA exemption even though you might have stayed in the hotel during your leave.
  9. The maximum LTA for the purposes of LTA tax exemption is Rs.20,000 so normally most organizations design the salary structure in such a manner that they don’t give the employees more than Rs. 20000 as LTA.
  10. In terms of proof for air travel – although there is no fixed rule as such, it might be a good idea to preserve the boarding pass along with the ticket to make sure there are no problems in claiming LTA exemption later on.
  11. LTA can only be claimed for the shortest distance between two places. So if you are planning to travel from Goa to Mumbai then you will be allowed exemption on tickets from Goa to Mumbai and back. You will not be allowed to produce tickets that are via some other place like Mumbai to Hyderabad and then from Hyderabad to Goa and so forth.
  12. LTA can only be claimed on tickets or rented private vehicles, you cannot show petrol or diesel vehicles for your own vehicles and then claim exemption on it.

The above are just some of the points that need to be kept in mind while discussing LTA exemptions. Because tax rules keep changing it is best to discuss with a professional before taking any decision.


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{ 97 comments… read them below or add one }

ssr February 11, 2010 at 3:45 am

When you claim LTA by submitting tickets, then you are not taxed for that. Alongwith this can I also claim 25% as incidental expenses under the tax rules. When I was with Reserve bank of India I had this option, but in the corporate this is not being considered. Can you pl clarify and provide me the authority

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NEHA April 13, 2010 at 8:08 pm

WE HAVE TAKEN LTA IN THE MONTH OF OCT 2009 .CAN WE TAKE LTA IMMEDATILY IN NEXT BLOCK THAT IS 2010-2013. WILL WE GET EXEMPTION ON THAT IN THE YEAR 2010 IF WE GO ON LTA?

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SAGAR April 14, 2010 at 9:45 pm

is it mandatory to start the journey from the place of work only and not from home town (both being different) for taking LTA exemption.

Ex. Place of work — gurgaon
Hometown ——-nagpur
then
can i claim LTA exemption for journey for
Nagpur — Chandigarh—–gurgaon.

if not as per what rule????

Please help

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Nataraj July 16, 2010 at 2:20 am

Dear Money Manager,

My LTA is equal to on month basic salary, and is equal to Rs. 48,000 pa. My company gives LTA as part of monthly salary…ie Rs. 4000 per month and mentioned in Salary slip as LTA ….so how do I claim exemption of LTA once in two years?

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Manshu July 20, 2010 at 3:57 pm

The way your company pays you the LTA has nothing to do with how you get taxed.

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krishna March 23, 2011 at 4:33 am

pl. reply on above question

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Manshu March 23, 2011 at 3:50 pm

Krishna – It’s not clear to me which question you’re referring to – I don’t see your name in any earlier comment. Can you please copy paste the question in a new comment?

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satyen January 21, 2011 at 4:53 am

can we claim the package tour taken for the family for LTA..

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Manshu January 21, 2011 at 10:46 am

Yes Satyen, you can take this for you and your spouse. Children, only if they are dependent on you.

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PRIYA January 27, 2011 at 11:32 pm

can you please explain about LTA briefly?

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Manshu January 28, 2011 at 5:34 am

LTA stands for Leave Travel Allowance, and is often paid by employers as part of an employee’s salary. It’s often paid out in a lump – sum, so say you might have a LTA of Rs. 25,000 in your salary, and when you request your employer to pay your LTA to you – they pay the entire sum in a particular month’s salary.

It has a tax treatment slightly different from other parts of the salary, and can be exempt also, so that’s why it’s kept as a separate chunk of money by employers instead of having that 25k as part of any allowance or something.

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Rochelle March 31, 2011 at 2:43 am

Firstly thanks Manshu for your eye opening articles. Just a small qt. on LTA. so if i have accumulated 40000/- as LTA and i claim 21000/- in the 1st yr itself, will the remaining 19000/- be taxed and paid in the monthly salary? Or will that 19000/- accumulate in the LTA account till i claim it the next time/till 4 yrs elapse? thanks in advance.

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Manshu April 3, 2011 at 4:21 pm

How you get LTA money paid depends on how the company has set up its rules. I’d expect them to pay that to you at the end of the year. The rules about taxation are laid by the govt. but how you get paid is primarily based on how it’s defined by the company.

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Rochelle April 8, 2011 at 4:04 am

Thanks Manshu. Yes you are right. Our company policy is to pay the remainder amount at the end of the financial year. Thanks for your reponse.

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Manshu April 8, 2011 at 10:56 am

You’re welcome Rochelle – appreciate your coming back and leaving this comment. Doesn’t happen very often.

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Samuel April 14, 2011 at 11:36 pm

Hi,

I had taken Earned Leave from Feb 23rd to Mar 11 2010. (13 days). During that time I made the following travels:

Bangalore to Tuni : Train
Tuni to hyderabad : Flight
Hyd to Coimbatore: Train
Coimbatore to ooty: Car
Ooty to Coimbatore: Car
Coimbatore to Guntur: Train
Guntur to Bangalore: Train

Will I be able to claim the ememption for these travels? Please can you help me with this?

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Manshu April 16, 2011 at 12:58 pm

Samuel – you can claim the travel expenses for the shortest distance between two places. So if you want to claim for this set of journey you will have to see what’s the max you spent on travel between any two points and then claim for it. As far as I know you can’t claim for the whole journey the way you have described.

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Samuel April 18, 2011 at 3:55 am

Thanks a lot Manshu…

The journey is done between Bangalore and Ooty. But they are not connected by Train. Hence can I claim the train 1A fare for Bangalore to Coimbatore and Car fare for Coimbatore to Ooty?

In that case exemption is something like Train fare (1080*4) + Car fare (1650+1600) = 7570 Rs…

Actual Amounts spent are as below:
Bangalore to Tuni ( Train ) 339
Tuni to hyderabad ( Train ) 1404
Hyd to Coimbatore (Flight) 5100
Coimbatore to ooty ( Car ) 1650

Ooty to Coimbatore ( Car ) 1600
Coimbatore to Guntur ( Train ) 1666
Guntur to Bangalore ( Train ) 1512
Total 13271

Please canyou advise?

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Manshu April 18, 2011 at 6:00 pm

I think you’re better off consulting a CA Samuel because I don’t practice tax, and am not familiar enough to advise in this situation – slightly more involved. I may just end up putting you on the wrong track. Sorry!!!

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Kunal July 28, 2011 at 11:23 am

Hi, My company does not provide us the LTA as part of Salary, still i want to claim it. can i claim it and how much is the maximum limit for the same.

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Rajib Dey April 20, 2011 at 4:09 am

I have claimed LTA exmption from Apr’09-March’11 in the month of Apr’11. I had submitted documents of the travel in Nov’10.

Can I not get LTA exemption based on the above documents as FY is changed.

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Manshu April 20, 2011 at 11:22 am

The current block is calendar year 2010 – 13, and it looks like you have already claimed exemption in that, so based on that I’d imagine that you can’t get another exemption now.

You could check this with a CA because I’m not one and my interpretation of tax may not be accurate.

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Manoj Srivastava September 27, 2011 at 4:23 pm

Hi,
I have travelled in Feb 2011 and missed claiming it within FY10-11. Can the same journey and tickets be used for getting tax expempted LTA in FY11-12. I have submitted this with my employer in June 1011 and is under processing. If my employer pays it, do i need to declare it in my ta retrun of FY10-11? I would request a quick reply from experts .

Thanks

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Manshu September 28, 2011 at 4:27 am

I’m sorry but I don’t know the answer to this question .

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Andy December 14, 2011 at 2:54 pm

Hi, My company does not provide us the LTA as part of Salary, still i want to claim it. can i claim it ?please help ?

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Manshu December 14, 2011 at 11:25 pm

If they don’t give that to you then you can’t claim it.

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subu December 18, 2011 at 9:59 am

For LTA claim I missed the boarding pass but I can download the ticket from the airlines site which have all the details as PNR no., cost etc. Is it a valid document for claiming LTA?
Thanks in advance.

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Manshu December 19, 2011 at 1:30 am

Per SC guideline from a few years ago, you no longer need to furnish travel proof, so you can claim LTA even without the boarding pass.

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subu December 18, 2011 at 12:12 pm

Also please let me know how is IFCI infrastructure bond rated and should I go for it or wait for some other.

Thanks

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Pramod Babu January 25, 2012 at 10:04 pm

Dear Sir,
I am planning to go for a travel from Bangalore to hyderabad,

1) My travel Plan is Bangalore to Vijayawada to Hyderabad to Bangalore.
2) I will be travelling by my Car
3) Can i claim Tax Exemption for the Travel from Bangalore to Hyderabad.

Regards
P.Pramod Babu

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Hema R.Iyengar March 7, 2012 at 4:09 pm

I get LTA Rs .10000/- p.a . I have not claimed since last 4 years. My accumulation not is Rs.40000/- can i make tour expenses of Rs.40000/- and product the bill of Rs.40000/- for claiming tax benefit

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Manshu March 8, 2012 at 5:28 am

Yes you may claim that.

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Hema R.Iyengar March 9, 2012 at 12:09 pm

Thanks for your reply

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Ankit January 11, 2013 at 12:50 pm

Hi Manshu,
I had travelled with my family from Pune to Puri to Thiruvarur to Pune by road in a rented car.
How do I claim for LTA and will this be a valid case for LTA exemption ?
Eagerly awaiting your comment.

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Avijit July 21, 2014 at 9:24 am

Hello,
I travelled from Bangalore to Bangkok ( and back ) for my leave. The ticket raised by Indigo had a single PNR number and a total invoice value. However, it was basically two flights – one from bangalore to calcutta and the other from calcutta to bangkok and I was given two seperate boarding passes. But indigo is refusing me to provide a billing breakup for the bangalore to calcutta flight, hence I cannot claim the tax exemption. Please suggest.

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babanna July 24, 2014 at 11:23 am

sir
LTA amount is it uniform to all states in india or different on state wise?
I work for a company in Bangalore. They have been giving me salary from Kolkatta. My professional tax deducted in Kolkatta. PF in a trust at AP. LTA they give me yearly 6 percent on basic salary. I do not get family package LTA as they say it is not permitted. But ask me to fill up the LTA forms and do not reimburse actual train or airfare from point to point onward and return journey. Please advise what my employer is doing is right? I have been with them for past 12 years and LTA is given in this fasion. your article gave me some insight into this practice. The company i work is group company diversified interest in business. LTA amount is it consolidated payment for block of 4 years or is it every year. please enlighten me. rgds

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