LTA Liabiltiy

1653 views 2 replies

Hanuma

13 Points Joined March 2007

hi!

iam working in thye Internal Audit Department of a pharmacuitical's company having 150 crores tirnover.
my query is the company pays LTA to its field staff if any person avails minimum 5 days leave.

LTA will be paid on claim basis only.
now the field staff are claiming 2004,2005 calender year's LTA placing an application for as per sec10(5) in the present calendar year2006.
can anyone explain me what is the tax consiqueses u/s 10(5) to the individual assessee as well as to the company.

Replies (2)

Abraahamlcn

13 Points Joined March 2007

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Anand Trivedi

16 Points Joined March 2007

Rule 2(B) read with Section 10(5) prescibes Conditions towards exemptoins of LTA.The Exemtion is limited to the anount actually spent means there should be prpoer Bills supporting that the Employee has undertaken travel in this regards and further only 2 journeys in a block period of 4 years are exemt and the years for which you are receiving the Claims of Employees are covered by the Block priod 2002-2005. Technically if claimed within first Calender Year of the Next Block of 4 years i.e. 2006-2009. This is called "Carry Over Concession"
If the Claims for 2004 and 2005 were lodged before 31st Dec 2006 the Employees could be granted Exemption afainst full supports and if 2007 those wetre lodged they will attract tax.
The Company will need to pay FBT.