LTA Allowance

Dear Sandeep,

Just see the FAQs on LTA/LTC - Originally posted by friend Rahul Bansal

The LTA / LTC that you get is fully exempt from income tax, provided it satisfies certain conditions. Here are the conditions:

The amount is actually spent on travel

You have to actually spend this amount on transportation. The spending can be for you and your family members, but you have to be one of the travelers.

Here, family means spouse and children (including adopted children and stepchildren). Parents, brothers and sisters are also included if they are dependent on you.

It has to be for transportation

The amount has to be spent on transportation – either air, rail or road.

Any amount spent for lodging and boarding is not considered. Thus, food related expenses and hotel expenses are not exempt from income tax.

Also, this exemption is for primary travel between your city of stay and your destination. Other travel expenses like taxi / cab fare, auto fare, etc. can not be claimed as exempt.

Travel within India

The travel has to be within India – foreign travel is not considered. The government wants to boost tourism within India, not international travel!

Shortest Distance and Cap on claim amount

The amount exempt would be the amount required for travel to your destination by the shortest route, depending on the mode of your travel.

If you travel by air, the maximum amount that can be claimed as exempt is the economy class air fare to your destination by the shortest route.

If you travel by rail (or road), the maximum amount that can be claimed as exempt is the air conditioned first class (AC I Class) rail fare to your destination by the shortest route.

Proof of travel

Proof of travel needs to be preserved and presented to claim this exemption. The tickets are considered valid proof.

If you arrange travel through a hired or rental car, the receipt from the travel agency or car rental agency is considered valid proof. Please note that any non-transport component (like driver allowance) is not considered for income tax exemption.

Thanks for your valuable suggestion.

regards,

Sandeep