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LTA exemption

Sujit Talukder (service) (719 Points)

19 May 2009

Is LTA exemption availble if journey is performed

1. by hiring a car?

2. by waterways?

Please clarify.

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PRAVEEN KUMAR (MBA (Finance) B.Com.(P)) (3443 Points)
Replied 19 May 2009

LTA can only be claimed on tickets or rented private vehicles,

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(Guest)

Income Tax Rule Regarding LTA

As per the Rules, Income Tax benefit on LTA can be claimed only twice during the block of 4 years. (current Block is 2006-2009)

For this purpose :

>> you should be on leave.

>> you should travel (For Income Tax benefit).

** During such travel you may have your family with you. Family for this purpose includes spouse, children as well as dependent parents, brothers and sisters.

** The LTA amount will be exempt to the extent of expenses incurred.

** Tax benefit onLTA Can be claimed only if the journey performed by the Individual. He/she may accompany his/her family members but it can not be claimed on the journey performed only by the family members

** The exemption will be available to a maximum of two children of an individual.

These points need to be noted:

• Where the journey is performed by air, an amount not exceeding the economy air fare of the national carrier by the shortest route to the destination

• Where place of origin of journey and destination are connected by rail and the journey is performed by a transport other than that, an amount not exceeding the air conditioned first class rail fare by the shortest route to the place of destination

Where the place of origin and destination are not connected by rail, the amount eligible for exemption is :-
a) where a recognised public transport system exists >> an amount not exceeding the first class or deluxe class fare by the shortest route to the place of destination, and
b) where no recognised public transport system exists >> an amount equivalent to the air conditioned first class rail fare for the distance of the journey by the shortest route, as if the journey had been by rail.

Proof of Journey

In order to claim the exemption, the individual must produce original proofs for expenses i.e. the tickets or bills. The tax benefit is available for actual fare only - hotel, food, sight-seeing, local conveyance etc are not included.

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