· Leave
Travel Allowance (LTA): All
of the salaried employees wants to know about LTA as LTA is the generally
included in the salaries by the employers due to the tax benefits attached to
it. An LTA is the remuneration paid by an employer for Employee’s travel
in the country, when he is on leave with his family or alone. The Person who is
claiming the LTA must be on leave in order to claim the exemption. LTA
amount is tax free under Section
10(5) of the Income-Tax Act, 1961, read with Rule 2B.
Leave
Travel Allowance (LTA) Exemption under Section 10(5) read with rule 2B
Leave Travel Allowance (LTA) Exemption under Section 10(5) read
with Rule 2B.
Leave Travel Allowance (LTA): All of the salaried employees wants to know
about LTA as LTA is the generally included in the salaries by the employers due
to the tax benefits attached to it. An LTA is the remuneration paid by an
employer for Employee’s travel in the country, when he is on leave with his
family or alone. The Person who is claiming the LTA must be on leave in order
to claim the exemption. LTA amount is tax free under Section 10(5) of the Income-Tax Act, 1961,
read with Rule 2B. Below
are few important aspects of LTA which a Salaried Employee wants to Know.
LTA exemption can be claimed where the employer
provides LTA to employee for leave to any place in India
Download Automated All in One TDS on Salary for Government &Non-Government Employees for Financial Year 2017-18 & Assessment Year2018-19 as per the latest Income Tax Slab Rate for F.Y.2017-18.[ This Excel utility can prepare at a time Tax Computed Sheet + Individual Salary Structure for Govt & Non-Govt Employees salary pattern + Automatic H.R.A. Exemption Calculation U/s 10(13A) + Automated Arrears Relief Calculator with Form 10E U/s 89(1) + Automated Form 16 Part A&B and Form 16 Part B ]
Exemption to be provided for
the Fare only: – The Exemption is provided only for the Traveling
Cost. i.e. Hotel Cost and other Expenses are not allowed only travel cost is Exempt. Therefore,
- If journey performed by Air: Economy Air fare of National carrier by
the shortest route or the amount spent whichever is less is Exempt.
- If journey performed by Rail: A.C. first class rail fare by shortest route.
Or amount spent whichever is less
is 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 whichever is less.
- Place of origin & destination not connected by
rail(partly/fully) but connected by other recognized Public transport
system – First class
or deluxe class fare by shortest route or amount spent whichever is less.
- Place of origin& destination not connected by
rail(partly/fully) and not connected by other recognized 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, whichever is less.
Travel within India only allowed- Travel has to be undertaken
within India
Exemption on Actual Travel
Expense – For example, where an employer provides LTA of
Rs 55,000, but an employee spends only Rs 40,000 on the travel cost, then the
exemption is limited to only Rs. 40,000. Travel cost means the cost of travel
and does not include any other expenses such as food, hotel stay etc.
What is the meaning of Family for LTA Exemption: –
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.
Restriction on Number of Child for Claiming LTA: – 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.
Can I Claim the LTA in case of Switch of JOB: – If you switch jobs, you can get the LTA not
only from your present organization but also from your former employer, if the
concession is lying unutilized. Let’s say that, in the 2014-17 block, you
claimed LTA in 2014. In 2016, you switched jobs. You can still claim your
second journey with your new employer. Of course, your new employer will ask to
look at your earlier tax returns to see whether it has been claimed or not.
Download Automated All in One for Non-Govt employees for FinancialYear 2017-18 & Assessment Year 2018-19 as per the latest Income Tax SlabRate for F.Y.2017-18 with Form 12 BA [ This Excel Utility can prepare at a time Individual Salary Statement + Tax Computed Sheet + Automated H.R.A. Calculation U/10(13A) + Automated Form 12 BA + Automated Form 16 Part A&B and Part B ]
Can I Claim the exemption every year: –No. The tax rules provide for an exemption only in
respect of two journeys performed in a block of four calendar years. The
current block runs from 2014-2017. If an individual does not use their
exemption during any block on any one or on both occasions, their exemption can
be carried over to the next block and used in the calendar year
immediately following that block.
In such cases, the journey performed to claim such
exemption will not be counted for the purposes of regulating future exemptions
allowable for the succeeding block. For example, Mr. X joins an organization on
April 1, 2011 and is entitled to a LTA of Rs 30,000 per annum (financial year
2011-12).
X undertook a journey in December 2011 and used his
exemption. However, for his LTA entitlement for 2012-13, he did not undertake a
journey during the calendar year 2012.
He can undertake the journey in 2014 to claim the
exemption in relation to the LTA. He would also be able to use the LTA benefit
for two other journeys which he can undertake in the current block 2014-17 in
relation to his LTA entitlement for future years.
Does claiming LTA in alternate years mean that the two year
entitlement gets added together: – It does.
If you are entitled to an LTA of Rs.10,000 per year and do not utilize it for
the the first year it is carried forward to the next year. In the second year
you can claim the entire amount (Rs.20,000) as tax exempt provided you spend it
according to the specification in LTA tax laws as detailed above.
Download Automated All in One TDS on Salary for West Bengal Govt Employeesfor Financial Year 2017-18 & Assessment Year 2018-19 as per the latestIncome Tax Slab Rate for F.Y.2017-18.[ This Excel Utility can prepare Individual Income Tax Computed Sheet + Individual Salary Structure + Individual Income Tax Statement + Automated Form 16 Part A&B and Part B for F.Y.2017-18]
Carry over concession for Leave Travel Allowance: – Leave Travel
Allowance (LTA) comes with a carry forward feature. You can carry forward your
Leave Travel Allowance in the situation that it has not been used. It can be
brought forward and claimed in the first year of the next block.
Can I Claim LTA Twice in a Year: – Though you
can claim two journeys in a block of four years, you can claim the LTA benefit
just once in a year. You cannot claim both the journeys in one year. So, while
a person can get an income tax exemption for two journeys in a block of
four calendar years, he can make a trip only once a year. If you make two
trips in a year, you lose one. One way out is to claim one and make your spouse
claim the other in case your spouse is also working.
LTA in case person who is claiming the LTA is not Travelling: – No, LTA
cannot be claimed for the family if you as a claiming person are not included
in the travel.
Can a husband-wife duo claim LTA: – Yes,
both the spouses can claim the exemption on LTA from their employers. However,
both of them cannot claim for the same journey.
Proof of travel :-Supreme
Court has held in the case of Larsen & Toubro and ITI that employers
are under no statutory obligation to collect bills and details to prove that
the employees had utilised the amounts obtained against these claims on travel
and related expenses. Employers while assessing the travel allowance claims, do
not need to collect proof of travel to submit to the tax authorities. Though it
is not mandatory for employers to demand proof, they still have the right to
demand documentary proof depending on its policy. The Judgment of
Supreme Court has only moved the responsibility from the employer to the
employee, the assessing officer can still ask for the employee to
provide details of travel.
The individual however needs to keep copies for his
or her own records. Such proofs are helpful at the time of the audit of the tax
return of the individual. Proof of travel could be, for example, tickets,
boarding passes, invoice of travel agent, duty slip etc .
Here
we would like also to draw attention of the employers to Circular No. 8/2013 dated 10-10-2013 which
says that in respect of LTA The employer has to satisfy the obligation that
leave travel (fare) concession is not taxable in view of section 10(5) the
employer is not only required to be satisfied about the provisions of the said
clause but also to keep and preserve evidence in support thereof. In our
opinion the circular failed to take into account SC Judgment in the
case of Larsen & Toubro and ITI and
Employer are not bound to mandatory preserve the Documents.
During the Fringe Benefit tax (FBT) regime, provision
of paid holidays, including travel cost to any place, stay expenses etc. were
subject to FBT in the hands of employers and were not taxable in the hands of
individuals. Many employers extended the paid holiday benefit instead of LTA.
Now with the elimination of FBT , with effect from.
April 1, 2009, paid holiday benefit is fully taxable in the hands of employees
and, therefore, employers are reintroducing the LTA element by withdrawing the
paid holidays benefit.
Download Automated Arrears Relief Calculator with Form 10E U/s 89(1) from F.Y. 2000-01 to F.Y.2017-18 ( Updated Version)
Extract of Section 10(5)
“Section
10(5) in the case of
an individual, the value of any travel concession or assistance received by, or
due to, him,—
(a) from
his employer for himself and his family, in connection with his proceeding on
leave to any place in India
(b) from
his employer or former employer for himself and his family, in connection with
his proceeding to any place in India after retirement from service or after the
termination of his service, subject to such conditions as may be
prescribed (including conditions as to number of journeys and the amount which
shall be exempt per head) having regard to the travel concession or assistance
granted to the employees of the Central Government :
Provided that the amount exempt under this clause shall in no case
exceed the amount of expenses actually incurred for the purpose of such
travel. Explanation.—For the purposes of this clause, “family”, in
relation to an individual, means— (i) the spouse and children
of the individual ; and
(ii) the
parents, brothers and sisters of the individual or any of them, wholly or
mainly dependent on the individual;]”
Conditions for the purpose of section 10(5) as Prescribed in Rule
2B of Income Tax Rules- Extract of Rule 2B
2B. (1) The amount exempted under clause (5) of section 10 in
respect of the value of travel concession or assistance received by or due
to the individual from his employer or former employer for himself and his
family, in connection with his proceeding,—
(a)
on leave to any place in India
(b)
to any place in India after retirement from service or after the termination of
his service, shall be the amount actually incurred on the performance of
such travel subject to the following conditions, namely :— [(i)
where the journey is performed on or after the 1st day of October, 1997, by
air, an amount not exceeding the air economy fare of the national carrier by
the shortest route to the place of destination;
(ii)
where places of origin of journey and destination are connected by rail and the
journey is performed on or after the 1st day of October, 1997, by any mode of
transport other than by air, an amount not exceeding the air-conditioned first
class rail fare by the shortest route to the place of destination; and
(iii)
where the places of origin of journey and destination or part thereof are not
connected by rail and the journey is performed on or after the 1st day of
October, 1997, between such places, the amount eligible for exemption shall be
:—
(A)
where a recognised public transport system exists, an amount not exceeding the
1st class or deluxe class fare, as the case may be, on such transport 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 performed by rail.]
(2)
The exemption referred to in sub-rule (1) shall be available to an individual
in respect of two journeys performed in a block of four calendar years
commencing from the calendar year 1986 :
[Provided that
nothing contained in this sub-rule shall apply to the benefit already availed
of by the assessee in respect of any number of journeys performed before the
1st day of April, 1989 except to the extent that the journey or journeys so
performed shall be taken into account for computing the limit of two journeys
specified in this sub rule.]
(3)
Where such travel concession or assistance is not availed of by the individual
during any such block of four calendar years, an amount in respect of the value
of the travel concession or assistance, if any, first availed of by the
individual during first calendar year of the immediately succeeding block of
four calendar years shall be eligible for exemption. Explanation : The
amount in respect of the value of the travel concession or assistance referred
to in this sub-rule shall not be taken into account in deter-mining the
eligibility of the amount in respect of the value of the travel con-cession or
assistance in relation to the number of journeys under sub-rule (2).]
[(4)
The exemption referred to in sub-rule (1) shall not be available to more than
two surviving children of an individual after 1st October, 1998 :
Provided that this sub-rule shall not apply in respect of
children born before 1st October, 1998, and also in case of multiple
births after one child.]
LTA
Form: To Download the LTA Form Click
Here
