Leave Travel Allowance: How to Claim LTA Tax Exemption

Leave Travel Allowance service helps employers and employees manage LTA claims efficiently. Check the process of tracking, applying, and reimbursing LTA benefits.
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3 mins
02-Jan-2024

Leave Travel Allowance (LTA) is a significant component of an employee's salary package that provides tax benefits for travel expenses incurred during leaves. This allowance is designed to encourage employees to take vacations and explore different destinations. LTA is often confused with Leave Travel Concession (LTC), but they essentially refer to the same concept.

In this article, we will delve into the details of LTA tax exemption, its limits, claim rules, and various aspects related to its utilisation.

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) is a component of salary that an employee can avail of when they take leaves and travel with their family. The sum granted as LTA by the employer is primarily intended to cover travel expenses such as airfare, train fare, taxi fare, and hotel expenses. LTA tax exemption is available under Section 10(5) of the Income Tax Act,1961, for domestic travel expenses incurred by employees. This exemption is allowed for travel undertaken in India only.

Conditions for claiming leave travel allowance exemption

When claiming for leave travel allowance exemption, keep in mind the following condition for a smooth process:

  • Understand the eligibility: To claim Leave Travel Allowance (LTA) exemption, you must be a salaried individual and have taken leave to travel within India with your family.
  • Keep documentation ready: Ensure you have proof of travel expenses, such as tickets, hotel bills, and any other related documents.
  • Claim within the specified time: Make sure to submit your LTA claim within the specified time frame to your employer.
  • Check your policy: Verify that your Pocket Insurance policy covers LTA exemption and understand the terms and conditions.
  • Consult your HR: Seek guidance from your human resources department regarding the process of claiming LTA exemption.
  • Submit accurate details: Provide accurate details of your travel expenses and ensure they match the documentation provided.

Eligibility criteria for claiming LTA

To claim LTA tax exemption, an employee must fulfil the following eligibility criteria:

  • The employee should be a resident of India.
  • LTA can only be claimed for travel within India.
  • The exemption is allowed only for two journeys made in a block of four years.
  • The maximum exemption allowed is up to the actual amount spent on travel, subject to the prescribed limit.

Leave travel allowance exemption rules for various modes of transport

Below are exemptions w.r.t various modes of transport:

Mode of transport

Exemption rules

Air travel

Economy class fare for the shortest route available is exempt.

Rail travel

Fare for AC first-class rail tickets is exempt.

Road travel

Exemption applies to fuel expenses based on prescribed rates or actual expenses with proof.

Other modes

Taxi, bus, or any other mode: Actual expenses incurred, or prescribed rates are exempt.


How to claim leave travel allowance?

A step-by-step guide to claiming leave travel allowance (LTA).

  • Collect documents: Gather travel-related documents such as tickets, hotel bills, and mode of transport receipts.
  • Check eligibility: Ensure you are eligible for LTA, typically applicable for domestic travel within India with family.
  • Submit claim: Provide all necessary documents to your employer within the specified time frame.
  • Await approval: Wait for your employer to review and approve your claim.
  • Receive reimbursement: Once approved, you will receive reimbursement for eligible expenses.
  • Keep records: Maintain records of all expenses and approvals for future reference.

Read more: Travel Insurance

Can I carry forward the unclaimed LTA of a block year to the next block year?

The Income Tax Act allows employees to carry forward the unclaimed LTA of a particular block year to the next block year. The block year for LTA is generally a four-year period, and any unclaimed LTA from the first two years can be carried forward and claimed in the first year of the next block. However, it's important to note that only one unclaimed LTA can be carried forward.

What expenses can be included under LTA?

The following expenses are covered under the LTA:

  • Travel fare: Expenses for air, rail, or bus tickets can be included.
  • Accommodation: Costs for hotel stays during the trip are eligible.
  • Local transport: Expenses for taxi fares or local transportation are covered.
  • Food expenses: Expenditure on meals during the journey is considered.
  • Sightseeing costs: Charges for entry tickets to tourist attractions qualify.
  • Other incidentals: Miscellaneous expenses related to the trip may also be included.

Who are included in the travel cost claimed for tax break under LTA?

When claiming LTA tax exemption, the travel cost includes expenses incurred for the employee and their immediate family members. Immediate family members, as mentioned earlier, include the spouse, children, parents, and dependent siblings. It is crucial to maintain proper documentation of the expenses and the relationship with the family members to support the LTA claim.

How can I claim LTA in case of a multi-destination journey?

In situations where an employee plans a multi-destination journey, the LTA exemption can still be claimed. The tax benefit is available for two journeys in a block of four years. Employees have the flexibility to choose different destinations and modes of travel, as long as the journey is within the country. The claim should be made for the actual expenses incurred during the travel, and relevant documents must be submitted to the employer for reimbursement.

What happens to my LTA if I do not travel at all or do not submit travel bills?

If an employee does not undertake the intended travel or fails to submit the required travel bills, the LTA remains unclaimed for that particular block year. In such cases, the employee may lose the tax benefits associated with LTA for that specific period. However, as mentioned earlier, the unclaimed LTA can be carried forward to the first year of the next block, subject to certain conditions.

Leave Travel Allowance (LTA) is an essential part of the salary package for employees who want to take leave and travel with their families. It not only supports employees' travel expenses but also provides them with tax exemptions.

Employees should ensure that they comply with the eligibility criteria and claim the LTA within the stipulated block of four years. By following the proper rules and procedures, employees can enjoy the tax benefit while also fulfilling their travel aspirations.

Read more: Loss of business income insurance

Frequently asked questions

What is LTA?

LTA stands for Leave Travel Allowance. It is a component of salary that employees can avail of when they take leave and travel with their family.

What is the LTA tax exemption?

The LTA tax exemption is available under Section 10(5) of the Income Tax Act,1961, for domestic travel expenses incurred by employees.

What is the LTA tax exemption limit?

The LTA tax exemption limit is the actual amount spent on travel subject to the maximum prescribed limit. The exemption is available only for two journeys made within four years.

How does LTA work in salary?

LTA is a component of the salary package offered by companies to their employees. It intends to cover expenses incurred by the employee while they are on leave and travelling with their family.

How much LTA can be claimed?

The amount you can claim for LTA depends on your employer's policies and the rules set by the Income Tax Department. Typically, it is based on actual travel expenses incurred during the journey.

What is the difference between LTA and travel allowance?

LTA (Leave Travel Allowance) is a component of your salary that provides tax benefits for expenses incurred on travel during leave. Travel allowance, on the other hand, is a fixed amount provided by the employer to cover travel costs without tax benefits.

What are the rules for LTA claim?

The rules for claiming LTA include eligibility criteria such as being a salaried individual, travelling within India with family, and providing valid documentation like travel tickets and accommodation bills. The claim must be submitted to the employer within the specified time frame.

What is the maximum limit for LTA?

The maximum limit for LTA is determined by your employer's policies and the Income Tax Department's regulations. Generally, it is based on the actual expenses incurred during travel, subject to certain restrictions and conditions set by the employer and tax authorities. It is advisable to check with your HR department or tax advisor for specific details regarding your LTA entitlement and limits.

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