Leave Travel Allowance (LTA) - Exemption Limit, Rules, How to Claim, Eligibility & Latest Updates

Leave Travel Allowance (LTA) is given to employee to reimburse travel expenses, typically on a vacation. The unique aspect of LTA is its tax-exempt status under certain conditions, as outlined in Section 10(5) of the Income Tax Act, 1961. This exemption allows employees to deduct LTA from their taxable income, leading to potential tax savings.

 LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination of service. 

LTA can be claimed for any two years in a block of 4 calendar years. The current block year for claiming LTA is 2022 to 2025. The tax exemption of leave travel allowance is not available in case you choose the new tax regime.

What is Leave Travel Allowance (LTA)?

• Under the provisions of Income Tax Act, Leave Travel Allowance/Leave Travel Concession is a type of allowance given by an employer to their employee for travelling to any place in India.
• It can be given either on leave, after retirement or after the termination of his service. 

Note: The red arrow shows the lower of the two amounts will be exempted. For instance, if you travel by air, the exemption amount will be either your actual travel costs or the cost of an economy class ticket, whichever is lower. The journey should be taken through the shortest route to the destination. 

Who Can Claim LTA?

Only individuals(residents and non-residents) can claim LTA for travel costs incurred for themselves and their family (Spouse, children, wholly or mainly dependent siblings, parents)

Conditions for Claiming LTA

Let us understand the conditions/requirements for claiming the exemption:

• Only domestic travel is considered for exemption, i.e., travel within India. No international travel is covered under LTA/LTC
• The exemption for travel is available for the employee alone or with his family. ‘Family’ includes 
  • Spouse
  • Children
  • Dependent parents
  • Brothers, and sisters of the employee. 
• Further, such an exemption is not available for more than two children of an employee. If twins are born after first child, the restriction is not applicable. LTA can be claimed for all the three children.
• Valid Proof of travel is essential to claim the exemption.
• The exemption is limited to certain class of tickets.
• Expenses like food and accommodation cannot be claimed.

LTA/LTC Exemption

• The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. 
• No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. 
• Exemption can be claimed only to the extent of allowance granted by the employer.

For example, if LTA granted by the employer is Rs 30,000, and the actual travel cost incurred by the employee is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary income.

Exemption w.r.t Various Modes of Transport

Can LTA Exemption be Claimed on Every Vacation?

No, an LTA exemption is available for only two journeys performed in a block of four calendar years.

Block Year

• A block year is different from a financial year and is decided by the Government for LTA exemption purposes. 
• It comprises 4 calendar years each.
• The block applicable for the current period is  2022-25. 

Carryover of Unclaimed LTA/LTC

• If the employee has not availed exemption for one or two journeys in any of the block of 4 years, he is allowed to carryover one such unavailed LTC exemption to the next block.
• The carried forward exemption should be availed in the first calendar year of the immediately succeeding block. 

Consider the below example for a better understanding:

• Where carry over exemption is claimed in the first calendar year of the immediately succeeding block

• Where carry over exemption is not claimed in the first calendar year of the immediately succeeding block

Procedure to Claim LTA

• The procedure to claim LTA is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc., along with the mandatory declaration. 
• Though it is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and also to submit them to the employer based on the LTA policy of the company to tax authorities on demand.

Multi-Destination Journey

• As per the provisions of the act, computation of LTA exemption is given only to the extent of ‘Shortest route from the origin to destination’.
• So, if the journey has 2 or 3 destinations, the shortest distance from starting point to the farthest destination only will be considered. Whole of the travel expenses cannot be claimed.

LTA Exemption for Vacation on Holidays

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organizations may reject LTA claims for travel on official holidays or weekends. 

Also read about:   
Basic Salary   
UAN Login   
Last Date to File ITR    
Section 115BAC of Income Tax Act    
Income Tax Deductions List   
How to e verify ITR    
Annual Information Statement (AIS)   
Section 80D    
Home Loan Tax Benefit   
House Rent Allowance (HRA)