Leave Travel Allowance or LTA forms a simple yet significant part of an employee’s salary. And while you may not see LTA as a huge tax-saver option, it can help you save more money than you think.
New Delhi: Leave Travel Allowance or LTA forms a simple yet significant part of an individual’s salary statement. And while you may not consider it as a huge tax-saver option, the fact is LTA can help you save significant money if you know the nitty-gritties of LTA claims and exemptions. Here’s all you need to know about Leave Travel Allowance.
What is LTA?
LTA or leave travel allowance is an allowance given to an employee by employers for travel. LTA covers within-country travel costs when an employee is on leave from work. However, not all travel costs can be claimed under LTA.
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Limitations of LTA
Leave Travel Allowance covers the employee’s domestic travel only. It does not cover international travel. Furthermore, the mode of travel has to be either air travel, railway or a public mode of transport. More importantly, LTA cannot be claimed every year. It can only be claimed twice in a block of four years.
An important distinction that must be kept in mind is LTA exemptions can only be claimed on the actual travel costs. Expenses such as hotel accommodation, sightseeing, food, local conveyance, etc. cannot be claimed under LTA.
For example, if LTA granted by an employer is Rs 40,000 and actual eligible travel cost incurred by the employee is Rs 20,000, then exemption would be available only for Rs 20,000 and the remaining balance of Rs 10,000 would be included in taxable salary.
List Of Exemptions
Under LTA, there are a range of exemptions that an individual can take advantage of while claiming LTA. These exemptions differ depending on the mode of travel. These exemptions are as follows –
1. Air travel – economic air fare by the shortest route or amount spent is exempted depending on whichever is lesser.
2. Rail travel– A.C. First class fare by the shortest route or the amount spent on travel depending on whichever is lesser.
3. Place of origin & destination place of journey connected by rail but journey performed by other modes of transport.
4. Place of origin & destination not connected by rail (partly/fully) but connected by other recognised public transport systems.
5. Place of origin & destination not connected by rail (partly/fully) & not connected by other recognised public transport systems also.
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Does LTA Cover Travel Costs Of Family?
LTA can be claimed not just for the employee’s travel costs but also for the travel costs of his family. However, ‘family’ consists of the employee’s spouse, children, dependent parents, brothers, and sisters of the employee.
Procedure To Claim LTA
The process to claim LTA varies from one employer to the other. Usually, each employer announces a due date within which employees have to submit their claims and proof of travel. Although it is not mandatory to submit proof related to travel costs, employers can insist on written proof and therefore, employees are usually advised to retain such proofs and documents.
