Leave Travel Allowance (LTA) - Explained

Leave Travel Allowance (aka LTA) or Leave Travel Concession is given to employees to travel to any place in India either on leave or retirement from service or termination from service. Learn more.

Section 10(5) of Income Tax Act 1961 provides the exemption in respect of Leave Travel Concession (LTA).

This document covers

1. Who can claim LTA?
2. Conditions for claiming LTA
3. Limit of Exemption for LTA
4. Limits of exemption for various modes of Transport

1. Who can claim LTA?

• Individuals (Citizens as well as non-citizens) can claim the Leave travel concession received as a part of the salary.
• LTA can be claimed in respect of travel done by the taxpayer and his/her family. Family for the purpose of LTA consists of taxpayer, spouse and children of the taxpayer and parents, brothers and sisters of the taxpayer or any of them wholly or mainly dependent upon the taxpayer.

2. Conditions for claiming LTA

• LTA should be given by the employer as a part of the employee salary. Employee cannot claim exemption if LTA is not part of his salary
• LTA exemption can be claimed only for actual expenses.
• LTA exemption can be claimed in respect of Domestic Travel only. It cannot be claimed in respect of international travel.
• LTA exemption can be claimed for a maximum of 2 children born after 01st August 1998. The restriction of 2 children is not applicable to multiple births after 1 child. For children born before 01st August 1998, there is no restriction.
• LTA can be claimed for only the travel cost. LTA cannot be claimed for hotel and accommodation, petrol, site seeing costs etc.
• LTA exemption is minimum of Actual travel cost or LTA provided by employer.
• LTA is taxable if the employee encashes the Leave Travel allowances.

3. Limit of Exemption for LTA

• The LTA exemption is available in respect of 2 journeys performed in a block of 4 calendar years commencing from the calendar year 1986.
• If the taxpayer does not avail LTA in a block of 4 calendar years, 1 such unavailed LTA will be carried forward to the immediately succeeding block of 4 calendar years and will be eligible for exemption.
  Example : Mr Ram does not avail the Leave Travel Allowance (LTA) for the 2018-2021 years. He can carry forward the maximum 1 LTA to the next block i.e., 2022-2025 years. If he avails the LTA in April 2022, it will be treated as having availed in respect of journeys in 2018-2021. He is also eligible to take exemption for 2 more journeys in the block of 2022-25
• The current block for claiming LTA exemption is 2022-2025

4. Limits of exemption for various modes of Transport

1. If the journey is performed by Air : Amount not exceeding the air economy fare of the National carrier by the shortest route to the place of destination.
2. If the journey is performed through any other mode:
   1. Where Rail Service is available: Amount not exceeding the air conditioned first class rail fare by the shortest route to the place of destination
   2. Where Rail service is not available :
      1. A Recognized public transport system exists : Amount not exceeding the 1 st class or deluxe class fare on such transport by the shortest route to the place of destination.
      2. No Recognized public transport system exists : Amount equivalent to the air conditioned first class rail fare , for the distance of the journey by the shortest route as if the journey has been performed by rail.