How is my LTA Taxed?

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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101 thoughts on “How is my LTA Taxed?”

  1. Hello,

    Need urgent help.
    I am working in a mnc at hyderabad. Last year 2008 I have claimed LTA (Tax-excemption) Hyderabad to Delhi. This year also I am going to claim LTA (Tax-excemption). But my HR people told me that I can claim LTA but I can produce bill for my home town journey only i.e from hyderabad to surat.

    Is it true that LTA can be claim once for outside home town and other for home town journey only ?

    Can’t I go two time outside of my home town in a block of 4 year ?

    Need urgent response. Please mail me on patelkirtim@gmail.com

    Thanks in advance.

  2. Any clue on limit on No. of Bills Submitted ?
    If i am claiming LTA of 20k, then should it come of only two bills (that is two journey) or even more than 2 would do ?

  3. I have claimed LTA for thif FY amounts to Rs 41000/- on Taxi bill for journey of 4 persons incl me of my family but i got the exemption of Rs 36000/- only.

    Our HRD confirmed that reason for getting lesser exemption is due to calculation of equivalent distance’s least fare by Ist class AC rail fare which amounts to only Rs 36000.

    SO IS IT TRUE ? that taxi bills in LTA have calculation based on Ist class ac rail fare for exemption ?

    1. Hey nilesh,

      can you tell me the route which you travelled from-to so that you got 36000 as LTA.

      As i came to know from my collegue that my company has given only 17000 as LTA even if he has kept for 42000 claim based on his route calculation. Hence request your route.

      Please send the details to my mail id.

    2. Hey nilesh,

      can you tell me the route which you travelled from-to so that you got 36000 as LTA.

      As i came to know from my collegue that my company has given only 17000 as LTA even if he has kept for 42000 claim based on his route calculation. Hence request your route.

      Please send the details to my mail id.

      Regards,
      vamsi

  4. Dear Manshuv,

    I need to know that if I produce a LTA bill on 12 Feb 2008, then whether I will be eligible to get LTA that has got accumulated till:
    a. March 2008
    b. Jan 2009
    c. Till date (12 Feb 2009)
    d. Any other date that is applicable. (Please state the date in this case)

    Further, I had claimed for LTA around August 2008, the employer/company has payed me LTA till March 2008. Please let me know whether I can submit a fresh bill of amount that is equal to LTA that will accumulate from Apr 2008 to Dec 2009. Which duration should I consider for which I’ll surely get the money. For remaining duration, will I get the remaining amount/money on monthly bases, or will I get it after every financial year?

    Please help.
    Thanks & best regards,
    Rajeev Arora

  5. Hi Chirag,

    It can be any airline or even a train or bus ticket. As long as your journey has been made in one leave break.
    It has to be the shortest distance between two places so that needs to be taken into account.

  6. Hello Manshuv,
    I need to claim LTA exemption this year.
    My salary has LTA component of 2500/- per month.
    My journey is from Surat – Ooty in following manner:
    Surat to Mumbai – Rail
    Mumbai to Coimbatore – Air
    Coimbatore to Ooty – Bus or Taxi
    and vice versa.
    So how to claim LTA in this case.
    Also is the airline should be AirIndia/India airllines or any carrier is allowed.

  7. Yes Navaneeth, you can claim LTA as taxable without the bills. The amount will get added to the head salary. Based on your bracket, you will be taxed upon it.

  8. Sir,

    Can i claim LTA as taxable without producing bills. If yes then, what will be the tax structure? Will it be added to head salary?

    Please suggest.

  9. sir,

    your information given useful knowledge. i have a situation and hope u could suggest me.

    i joined one mnc comany in a month of oct, 2008 and i am going to resign the job and my salary is 26k. from my salary my employer is dedicting 800/- per month. my query is can i claim the lta by producing respective bills from the present employer on or before exit date?

    provide me with the best suggestion.

  10. sir, i have lta examption taken on 2007, that time i have prodused bil amount 14000.00 RS. that time my lta eligible limit was 7500.00 RS.and examption also taken only 7500.00RS. shell i take again lta examption on 2008.

  11. Sir i want to know that can an employye take LTA for three year in one time and second in above case amount will be taxable or not ?

  12. Hi, Thanks for all the information. It is quite helpful. I have one small query though… In case of travel by road— what is the requirement? Like we took a hired car to travel to Dalhousie and back, is that taxable??

  13. Claiming above 20,000 is taxable. So till 20k, the normal rules apply (mentioned above), but above that everything is taxable.

  14. quote
    “The maximum LTA for the purposes of tax exemption is Rs.20000 so normally any most organizations design the salary structure in such a manner that they don�t give the employees more than Rs. 20000 as LTA.”

    unquote

    pls. clarify the above point, that the amount of Rs. 20,000/-
    is the maximum for one year or claiming above Rs.20,000/- is taxable ?

  15. Hi Vishal,

    I don’t think that there can be a case when there is no limit at all, In which case you can get your entire salary as LTA, produce a bill and get all of it tax exempt!

    However its best to follow the advice of professionals looking at your pay stubs specifically.

    Again for the route that you have decided you gotta get in touch with them to see what is the explanation to the act.

    Thanks,
    Manshu

  16. Good article.

    Can you please clarify the folowing points:

    1) LTA tax exemption limit:
    I have been told by a professional organization that there is no top sealing/exempton limit for LTA. Any amount of actual bills can be billed for a continuous journey.

    2)Journey Route:
    Please elaborate on second last point of short journey. Suppose if i am travelling from Delhi to Manali, there can be two possible routes:
    a) Delhi-chandhigarh-Kullu-Manali
    b) Delhi-chandhigarh-Shimla-Kullu-Manali

    So if i choose either of the above, can i claim exemption?

    Waiting to see your reply.

    Thanks,
    Vishal

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