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. 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

  2. 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.

    1. 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.

  3. 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?

    1. 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.

      1. 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?

        1. 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!!!

          1. 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.

    1. 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.

      1. 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.

        1. 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.

          1. 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.

  4. 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?

        1. 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?

  5. 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

  6. 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?

  7. 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

  8. Hi,
    If I claim LTA more than 2 times in 4 years then what is tax deduction ?
    Can I claim LTA if not travled with family ?

  9. How to use LTA from two companies in same financial year?

    I would be leaving my current organization by end of Dec ’09. For the period of April ’09 to Dec ’09, I have received LTA for 30,000.

    Also, in the new organization, I would get LTA worth 5,000 for the remaining period of this financial year i.e. Jan ’10 to Apr ’10.

    Last month, I went on honeymoon vacation where I have spent around 35,000 for Travel. My current company Finance people say that I can submit the documents worth 30,000 max and not more than that.

    Please explain whether I can claim LTA for the entire 35,000. Because, if I combine the LTAs of both the companies, it is 39,000. If possible, what is the procedure?

    Also, out of the 4 boarding passes, I have 3 with me but missed the last one. Is it legally required to provide the boarding passes, not just the print out of the e-tickets alone?

  10. Hi!,

    I want to know if I do not take leave for LTA and the same LTA amount is paid to me, so can u advice me that what is the percentage rate charged, as the LTA amount is taxable.

  11. Hi Manshu,

    Can you tell me whether LTA can be claimed only if the source is where your office location is ? or can be from any where in india i.,e., other place which is neither my native nor where my office is situated ? ( as i am looking to claim from my uncle house to the place where i travelled with my family).

    Please send the details to my mail id.

    Regards,
    vamsi

    1. please send me the details if you have solved your query regarding place of office to be start point of journey to claim LTA

  12. I need clarification on the process to claim LTA for the following scenario.

    My employment base location is Pune.
    I travelled from Pune to Mumbai by Car.
    Availed flight from Mumbai to Kolkata. Stayed in Kolkata for few days.
    Travelled from Kolkata to Puri by Train. Stayed at Puri for few days.
    Returned from Puri to Kolkata by train. Stayed in Kolkata for a couple of days.
    Returned from Kolkata to Mumbai by flight.
    Returned to Pune from Mumbai by Car.

    Please let me know the best process that will entitle me to claim the maximum from my travel costs.

    With Regards
    Jay

  13. I need clarification on the process to claim LTA for the following scenario.

    My employment base location is Pune.
    I travelled from Pune to Mumbai by Car.
    Availed flight from Mumbai to Kolkata. Stayed in Kolkata for few days.
    Travelled from Kolkata to Puri by Train. Stayed at Puri for few days.
    Returned from Puri to Kolkata by train. Stayed in Kolkata for a couple of days.
    Returned from Kolkata to Mumbai by flight.
    Returned to Pune from Mumbai by Car.

    Please let me know the best process that will entitle me to claim the maximum from my travel costs.

    With Regards
    Jay

  14. Dear Manshu,

    I read all the people’s questions and your replies, but still have a doubt in one specific area of ‘break journey’.

    I am planning to go from Vadodara to Lucknow next month by flight. But, since there is no direct flight, I have to change planes at New Delhi. Hence, my journey would be Vadodara – New Delhi – Lucknow and back in the same way.

    If I am landing in Delhi then, I also want to stay there for a day or two, before flying to Lucknow. This could be either while going or on my return journey or both times too. Now, my HR says I can claim enitre amount from Vadodara to Lucknow flight as it is the shortest route in that mode (by flight). But, they say that if I stay in Delhi and then go to Lucknow after a days’ or more gap, they it will not be considered. In that case they suggest me to claim only for Vadodara – Delhi and Delhi – Vadodara flight expenses for LTA.

    My question is that what is the logic of that? Is there any rule or sub-clause in LTA that does not permit this thing? Because, I am anyway going to travel to my final destination (Lucknow) in that same leave period; then why can’t I have a gap of day or two days before going to my final destination? The route will still remain the shortest.

    Please clarify me urgently on this as I need to urgently plan and book tickets for this Diwali 2009.

    1. I tried to look up the relevant section but couldn’t find the rule relating to this. I am sorry that I was unable to help you out. Have a happy Diwali, whichever way it turns out though.

      1. Oh.. I wish something could’ve been found out. Anyways, thanks for your effort.

        My HR too tried to find some alternative to help me out and just told me this morning, that if I don’t make a long stop-over (except for changing flights) while any one journey, they will pay me full amount for that and for the journey with a Delhi stay, they can pay me for partial tickets, like Delhi to Vadodara only. So, for Lucknow to Delhi I will be paying from my pocket. Not a bad deal, atleast major travel cost is covered.

        Request you to let me know here or on my email in case you get any updates on this query just for my future use. Thanks again!

  15. Hi,
    I am in HR deptt. Giving exeption to employees this year. I have few questions please answer
    1. Upper Limit for LTA claim for one year?
    2. Bill are required?

    My finance department said there is no upper limit for LTA, should be reasonable and there is no need for bills for claiming LTA. Have a doubt?

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