Leave travel concession ( from company point of view)
This query is : Resolved
21 May 2012
Hello,,
i am doing an statutory audit of a company,,
here HR dept. asked me about max. ceiling amount of LTA which a company can allow to its employees.....
LET me clear it more,,
every employee can take deduction of the
1.fare of shortest route,,
2.actual expenses made by him,,
and the total amount can not exceed the amount specified by the company,,,
i.e. if the actual expense is 20000 and company allows 10000, then the employee will get exemption of 10000 only,,,, now my question is--
how companies specifies that max. amount,, what are the rules of income tax on max. amount allowed amount by the company,, plz rply as soon as possible....
i am doing an statutory audit of a company,,
here HR dept. asked me about max. ceiling amount of LTA which a company can allow to its employees.....
LET me clear it more,,
every employee can take deduction of the
1.fare of shortest route,,
2.actual expenses made by him,,
and the total amount can not exceed the amount specified by the company,,,
i.e. if the actual expense is 20000 and company allows 10000, then the employee will get exemption of 10000 only,,,, now my question is--
how companies specifies that max. amount,, what are the rules of income tax on max. amount allowed amount by the company,, plz rply as soon as possible....
22 May 2012
As far as determination of maximum LTA amount by companies are concerned, usually HR follows the policy to aligned with one's basic salary.
However, as far as taxation is concerned provisions and rules are very clear under Section 10(5) and Rule 2B , salient ones are:
* Travel should be within INDIA
* Exemption of Fare Only
* Two Journeys in a Block of 4 Calender years (currently running block is 2010-13)
* Fare from shortest route and of ACTUALs only, rest is taxable
* Exemption is not available for more than two children of an individual born after October 01, 1998
* For journeys performed by Air:
Air economy fare of the national carrier
(Indian Airlines or Air India) by the shortest route to the place of destination.
* Where place of origin of journey
and destination are connected by
rail and the journey is performed by
any mode of transport other than by
air:
Air-conditioned first class rail fare by the shortest route to the place of destination.
* Where place of origin of journey
and destination or part thereof are
not connected by rail:
(i) Where a recognised public transport
system exists, the first class or deluxe class fare on such transport by the shortest route to the place of destination.
(ii) Where no recognised public transport
system exists, 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.
* In view of recent Hon'ble SC verdict: claims' documentary supporting are not necessary for employer BUT it does also infer in other words that onus shifted to employee concerned.
However, as far as taxation is concerned provisions and rules are very clear under Section 10(5) and Rule 2B , salient ones are:
* Travel should be within INDIA
* Exemption of Fare Only
* Two Journeys in a Block of 4 Calender years (currently running block is 2010-13)
* Fare from shortest route and of ACTUALs only, rest is taxable
* Exemption is not available for more than two children of an individual born after October 01, 1998
* For journeys performed by Air:
Air economy fare of the national carrier
(Indian Airlines or Air India) by the shortest route to the place of destination.
* Where place of origin of journey
and destination are connected by
rail and the journey is performed by
any mode of transport other than by
air:
Air-conditioned first class rail fare by the shortest route to the place of destination.
* Where place of origin of journey
and destination or part thereof are
not connected by rail:
(i) Where a recognised public transport
system exists, the first class or deluxe class fare on such transport by the shortest route to the place of destination.
(ii) Where no recognised public transport
system exists, 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.
* In view of recent Hon'ble SC verdict: claims' documentary supporting are not necessary for employer BUT it does also infer in other words that onus shifted to employee concerned.
22 May 2012
Further like to add that, Income Tax Act does not specify any monetary limit which company could offer to its employees.It specify only the limit,an employee can claim exemption.
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