Can a holiday package be claimed for LTA exemption?

by Manshu on January 24, 2011

in Tax

I got this question in a comment the other day, and I phoned up my CA friend to ask about this.

He told me that a holiday package can be claimed for LTA exemption, but the only thing to keep in mind is that LTA exemption is for spouse, dependent children, dependent brothers or sisters only, so if you have taken a holiday with your extended family or children who are no longer dependent on you, then you can’t claim LTA exemption on that part of the expense.

Another thing is that since LTA exemption can be claimed only for travel – if your holiday package included hotel and sightseeing (which it normally does) – you won’t be able to take an exemption for that.

I thought this is a good opportunity to update my old post on LTA tax, so here is that post updated with new information.

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. A supreme court judgment said that it’s no longer mandatory for employers to collect travel bills.
  3. You can get your LTA exempt twice in a block of four years. Right now the block that is relevant is 2010 – 13. 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. 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. 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.
  10. 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.

I never liked tax, and have never been good with it, so there are many chances of a mistake, so please correct me if you see anything wrong.

Let me give you an example of why I don’t like tax. Here is this thing from the Income Tax Act that tells you how many children you can claim exemption for:

HAS ANY CHANGE BEEN MADE IN RULES FOR EXEMPTION OF L.T.C. TO DENY THIS BENEFIT TO LARGE FAMILIES?

Yes. Exemption of L.T.C. shall not be available to more than two surviving children of an individual after 1 st October 1998. However, this shall not apply in respect of children born before 1.10.98 and also in case of multiple births after one child. If an employee has before 1.10.98 even five children or more, exemption would still be available to all children. However, if an employee begets a third child after 1.10.1998, the L.T.C. for the third child will not be exempt.

You can thank them for not suggesting adoption!

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{ 20 comments… read them below or add one }

Atul January 25, 2011 at 3:54 am

Hi,

Can a widow sister and her children be included in dependent list for LTA purpose?

Regards

Atul

Reply

Manshu January 26, 2011 at 7:07 pm

Atul – As far as I know dependent sister should be eligible, but I haven’t read anywhere about her son. I’m sorry that I can’t really provide an answer to you.

Reply

Makar Gupta February 1, 2011 at 7:30 am

LTA is not part of my salary structure in my current company. CAN I claim LTA at the time of filing return.

Reply

Manshu February 1, 2011 at 8:18 am

I don’t see how you can if it isn’t part of your salary, but you should really be checking with a CA.

Reply

anurag April 14, 2011 at 5:52 am

what is the maximum exemption i can get in LTA in FY2011-12??

Reply

Manshu April 14, 2011 at 11:13 am

Anurag – this has to be lower of either what your company paid you as LTA or your actual travel expense.

Reply

Irshad May 3, 2011 at 11:29 pm

“you can claim LTA every year, but you will not be able to claim LTA exemption ever year”

I have LTA in my salary (but no limit), Do i need to claim it every year? if i won’t, then how the tax is calculated on it?

Reply

Manshu May 4, 2011 at 4:19 pm

I’m sorry I didn’t understand the question. Are you saying that your company can pay 100% of your salary as LTA? That doesn’t sound very likely. What companies normally do is keep an amount allocated towards LTA and give you the option to claim it any time during the year. If you don’t do that then they will pay that amount to you towards the end of the year. Check with them to see specifics.

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cnmodi October 16, 2011 at 7:21 am

can i take LTA for two difffernt leaves with in six month. e.g 1,one leave in nov’11 & second in Jan’12. i can take rs.1 lac as lta but i want to take like Rs.50,000/- in nove’11 & Rs.50,000/- in jan’12.
regards modi

Reply

Manshu October 18, 2011 at 11:26 pm

although i’m not entirely certain, i think that it is possible to claim more than one journey.

Reply

kumar November 24, 2011 at 5:52 pm

I work for a company in bangalore. Suppose I travel by AIR with my family between two cities ( to and fro), say Hyderabad and Mumbai, can I claim LTA on this travel. My concern is if the travel should orginate and complete at the city where u work.

Reply

Amit Topkar January 23, 2012 at 5:16 pm

Hi,

Last month i travel to UK for my family visit,can i get benifit of LTA.

Looking for your reply about the same.

Thanks & Regards
Amit Topkar

Reply

Amman August 2, 2013 at 11:30 am

No, LTA is only for local travel within India.

Reply

Sonal February 6, 2012 at 11:33 am

No, you cannot claim LTA for an international visit.

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Sonal February 6, 2012 at 12:20 pm

Mr Modi, As per my knowledge LTA can be claimed for only a single round trip per year. You cannot claim multiple round trips done during a year.

Reply

xyz February 24, 2012 at 6:15 pm

if i travel in feb 2011 …can i claim exemption for that journey in the financial year 11-12 …

Reply

xyz February 24, 2012 at 6:17 pm

if my family members travel journey without me can i claim exemption for that particular journey

Reply

gaurav C June 26, 2012 at 6:49 pm

Pl let me know if multiple travels to differenct locations can be clubbed for LTA claim in a particular year.

Reply

isha March 13, 2013 at 9:12 pm

I travelled during December 2012. if I fail to submit this trip from December 2012 in financial year 12-13, and instead the next month I.e. April 2013, it will be considered for the financial year 13-14. Is that right? And since this is first LTA claim I will submit for the block of 2010-2013, I assume I can still submit another trip for this block of 2010-2013, i.e., until December 2013. So in other words, can i submit travel from dec 2012 during financial year 13-14? And if yes, I m still illegible for another claim during same financial year? Please clarify/confirm and advise.

Reply

Amman August 2, 2013 at 11:29 am

I went a tour in my own vehicle, Can I claim for LTA exemption.
If yes what bills I supposed to produce.

Reply

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