The Leave Travel Allowance (LTA) is also known as Leave Travel Concession (LTC) which is an allowance given by the employers to their employees, which can be utilized for their travel expenses. LTA is an assistance received by the employee from his employer for travelling on leave.
The Salaried employee is required to submit the actual bills to the company for claiming LTA/LTC. Salaried Individuals can claim exemption of LTA u/s 10(5) of Income Tax Act, 1961. The amount of LTA provided depends upon the employee's working position.
LTA Rules for Exemption u/s 10(5):
LTA Exemption is available for travel assistance given by the employer to the employee or his family. The exemption is claimed for two journeys in a block of four years. Presently, the block of 2018-2021 is going on. Income Tax Department makes these blocks. The exemption if remains unclaimed can be carried forward to next year.
- Spouse of Employee
- Children of Employee
- Parents of Employee (mainly or wholly dependent on the Employee)
- Brothers and sisters of Employee (mainly or wholly dependent on the Employee)
The LTA rules for exemption are as follows:
- One can travel any place in India for holiday (Only Domestic Travel is considered). Actual journey is must to claim LTA exemption. No international trips are considered.
- To claim LTA, the mode of travel should be either air, railway or public transport.
- Exemption of LTA cannot be claimed for more than 2 children of an individual.
- Children born out of multiple birth after the first child will be treated as one child only.
- LTA Exemption is not allowed if it is encashed by the employee without going on any journey. The whole LTA amount is chargeable to tax.
- Expenses made on food, shopping, local conveyance, Hotel accommodation etc. are not eligible for exemption.
- LTA exemption is available only for two journeys within a block of four calendar years.
- The family of the employee can also take a tour without the employee and still claim exemption u/s 10(5). The family here refers to employee's spouse, two children and wholly dependent parents or brothers & sisters of the employee.
- The exemption is available for touring while in service or after termination or retirement from service.
- Proof of Travel shall be required for the purpose of Tax Audit.
What are LTA block years?
Leave Travel Concession or LTA block years are made by Income Tax Department to provide exemptions, which can be claimed twice within a block of four calendar years.
*Presently, the block of 2018-2021 is going on, which is the 9th Block year.
Carry over Concession/ Unclaimed LTA
In case where assessee did not utilize LTA provided by his employer either once or twice (as per the permitted limit) in a block period of 4years, then he can still claim LTA exemption in the year immediately succeeding the 4 years block period. It is known as carry over concession.
Let’s understand this with the help of an example:
Suppose Mr. Aditya claimed only one exemption during the 8th block which lasted from 2014-17. He still has one exemption remaining. So when can he claim it?
He can claim this travel concession in the next year, i.e. 2018, which is a part of 9th block period. So, in the 9th block period (2018-21), he can claim 3 exemptions in total but he needs to claim the carry over concession of previous block in 2018 itself and not in the later years.
Procedure to claim LTA
Employees can claim LTA through employer within the due date in which LTA can be claimed and for which employees are required to submit the proof of travel bills such as tickets, boarding pass etc.along with the mandatory declaration.
I have not claimed LTA in Return, When can I claim it?
LTA exemption cannot be claimed at the time of filing your return. The bills for your travel against LTA can only be claimed through your employer. You can claim LTA twice in a block of four years. Unclaimed LTA can be carried forward to the next year, therefore you can request your employer not to deduct tax on the same and allow you to claim it next year. You cannot claim exemption if you have missed submitting your travel bills.
Also, to claim LTA, travel expenditure amount with proofs of documents (travel bills) should be declared and submitted with Form 12BB to the employer at the end of the financial year.