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. say if actually 2 lakh rupees[or more] are spent in 1 travel, can this much amount be claimed for lta exemption….

  2. What is the maximum amount of lta that can be claimed as exemption from tax in 1 financial year.Say if actually rs 45,000 are spent in 1 single travel, can all be claimed or only rs 20,000 per annum, as mentioned in a few above question/answers..And under what section should thsi be shown while filing IT returns, under section VI A…or in losses[like hsg loan interest is shown]…clarify….or any other section…….

  3. Dear Sir,

    if a Properitership firm was started on 01.04.08. so, in this case can employee get the Tax Exemption benefit 2008-09 & Dec. 2009 twice on the withdrawn of LTA.
    & from 01.01.2010 – 31.12.2014 employee can withdrawn the LTA twice as per thr act block years.

    Regards
    vijender

  4. Akansha the limit remains the same regardless of what mode you use. Most taxis do provide a bill. Which part of the country were you looking at? Right at the time of calling them up, you can ask them to be ready with a bill and they will.

  5. what is the limit on LTA when road bills are claimed?

    how would a private taxi provide road bill?

    1. Hi manshuv,
      I want to know two things 1) if i dont go any where in a particular year then how can i get that LTA amt that is been included in my salary structure . 2) is it compulsory to include LTA in Salary structure suppose i dont want to bifer X amt as LTA in my salary structure i want to adjust that particular amt in basic salary structure is it possible
      Please revert back soon
      Regards,
      Amit

      1. 1. You can just ask your HR to pay it at the end of the year.
        2. That entirely depends on company policy to the best of my knowledge. Let me also add that I don’t think there is any benefit to be had from taking the allocation from LTA to Basic.

  6. Hi,
    If I have visited From Delhi to Rishkesh by private taxi (rented), can i charged the amount of Hire charges as against claim of LTA for any particular Calender Year.
    Awaiting response on urgent basis.

    Regards,

    Anil Kumar

  7. Hi Manshu,
    I appreciate you for providing such helpful information.

    I have not claim LTA for years 2006, 2007, 2008 and going to claim for 2009. I had a travel trip in year 2006 and 2008 as well.

    I can claim LTA exemption for the year 2009.

    Now if I’ll claim LTA for year 2006, 2007 or 2008, will I get the LTA exemption for any of these years? Or I’ll only get the LTA which will be taxable?

    Can you please suggest a optimum way in my case, to claim the LTA along with exemption?

  8. My company is paying LTA every month. So please let me know whether I am eligible for exemption. If yes then what will be my exemption. I am getting Rs1800 every month as LTA component.

  9. @Vijay – You can claim LTA as taxable without producing bill. The amount of the LTA will be added to your salary and you will be taxed acc to the bracket you are in.

    However, Supreme Court has recently passed an order which states that proof of bill is not required for claiming exemption. I am not sure of the intepretation of this rule but you can surely check with your HR.

  10. @Gokul – The exact definition is the shortest possible distance between two places, so if you went via some other place, it won’t be covered.

  11. Can I claim LTA as taxable without producing bills. If yes then, what will be the tax structure? and how I will calculate..?

  12. For availing LTA if husband & spouse are travelled by air in the different dates while back both are travelled by air in the same date in this case spouse onward journey can be considered for LTA calculation so please reply me in this regard.

  13. Dear Sir,

    I want to know the exact meaning for round trip for availing LTA for example if i am hiring taxi from bangalore to Chennai & covering some via places then for LTA calculation via places are covered or from source to destination

  14. Please tell me if i have travled by innoova car for 4 members of my family. the taxi bill is 24000rs.

    last year i got LTA is 10000 rs & this year is 12000 rs could i get exmption on 23000 rs this year if I havent claimed LTA last year.

    How much would be the LTA tax exemption it is 24000 rs or 22000rs actuall amount. pls help

  15. Hello,
    For claiming LTA, do we need to boarding passes ? My company is asking for the boarding passes as a verification. Since i have mistakenly not retained the boarding passes, what alternative do i have to claim LTA ?

    1. Supreme Court has recently passed an order which states that proof of LTA is not needed.

      Check with your HR about this new Supreme Court Ruling.

  16. Kirti,

    Rule 2(B) (act which clarifies LTA) doesn’t talk anything about home-town, so I am not sure what your HR is referring to. You can ask them about which section or case – this particular clause is in.

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