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Leave travel allowance(lta)

meabhijit (Project Manager) (172 Points)

17 February 2012

Hi,

Is there any maximum limit for LTA (Leave Travel Allowance) which can be claimed/exempted? As I understand, the LTA is exempted as per the employer stated amount for CTC. My employer provides me the flexibility to change the LTA limit to claim max tax benefit.

I am aware that the LTA is subject to various means of travel modes like Air (only economy class), rail (1st Class at shortest route) and road (govt or private bills).

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7 Replies

Sanat kumar (Chartered Accountant) (265 Points)
Replied 17 February 2012

I think you can change the LTA amount to avail the maximum benefit of tax exemption. Because u/s 10 (5) of income tax , the limit for LTA is not defined, only the limit for exemption is there (it is limited to amount actually spent on travelling of employee and his family members.).

Also it is allowed twice in a block of four years. (2010-2013)

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Anshul (.) (375 Points)
Replied 18 February 2012

Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B,

Who and what is covered?

Exemption of Fare Only - LTA exemption can be claimed where the employer provides LTA to employee for leave to any place in India taken by the employee and their family. Such exemption is limited to the extent of actual travel costs incurred by the employee. Travel has to be undertaken within India and overseas destinations are not covered for exemption.

Exemption on Actual Expense - For example, where an employer provides LTA of Rs 25,000, but an employeespends only Rs 20,000 on the travel cost, then the exemption is limited to only Rs. 20,000.

Travel cost means the cost of travel and does not include any other expenses such as food, hotel stay etc.

The meaning of ‘family’ for the purposes of exemption includes spouse and children and parents, brothers and sisters who are wholly or mainly dependent on you.

An individual would not be able to claim the exemption in relation to his parents, brother or sisters unless they are wholly or mainly dependent on the individual. Further, exemption is not available for more than two children of an individual born after October 01, 1998.

This restriction does not apply in respect of children born before this date, and also in cases where an individual, after having one child, begets multiple children (twins or triplets or quadruplets, etc.) on the second occasion. The term “Child” includes a step-child and an adopted child of the individual.

Amount Exempted

Journey performed by Air - Economy Air fair of National carrier by the shortest route or the amount spent which ever is less will be exempt
Journey performed by Rail – A.C.firstclass rail fare by shortest route.or amount spent which ever is less will be exempt.
Place of origin and destination place of journey connected by rail but journey performed by other mode of transport - A.C. first class rail fare by shortest route or amount spent which ever is less.
Place of origin& destination not connected by rail(partly/fully) but connected by other recognised Public transport system - First class or deluxe class fare by shortest route or amount spent which ever is less.
Place of origin& destination not connected by rail(partly/fully) and not connected by other recognised Public transport system also – AC first class rail fare by shortest route (as the journey had been performed by rail) or the amount actually spent ,which ever is less.
HOPE THIS EXPLAINATION WILL HELP YOU OUT SIR..

meabhijit (Project Manager) (172 Points)
Replied 19 February 2012

Thanks Sanat, Anshul.

I think we conclude that the exemption amount is not limited as a integer value but towards the actual expense subject to air,rail or road ways.

Mamta Uniyal (Finance Manager) (35 Points)
Replied 18 December 2012

What if the Actual Expense exceeds the LTA component of the salary package provided by the employer?

HARPREET SINGH (Chartered Accountant) (79 Points)
Replied 18 December 2012

Hi Mamta...Excess amount which you have spent is nothing to do with Income Tax Exemption.

Example

LTA Received 25,000

Actual expenses with proper bilss 28,000

LTA 25000 fully exempt subject to all conditions met by you.

Excess expenditure 3000 - Nothing to do with this section. That is your expense.

Hope this is clear.

Thanks

Harpreet Singh

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Mamta Uniyal (Finance Manager) (35 Points)
Replied 18 December 2012

Thanks Harpreet, Its Pretty clear with the example you quoted.

anup kumar (Contractor) (66 Points)
Replied 03 February 2016

I have one query that i had travelled on dated 21-March-2015. Can I take LTA exemption for the same in FY 15-16. I have not taken any LTA exemption in FY 14-15.