The full form of LTA stands for Leave Travel Allowance. LTA is a component of salary provided to cover expenses on vacation. Leave Travel Allowance can be claimed as an exemption, on satisfaction of certain conditions.
Key Highlights
- Leave Travel Concession is an employee reimbursement for vacation expenses within India.
- Concept of block calendar year is important here. Exemption can be claimed for 2 years from the above 4 years.
- Leave Travel Allowance is available only under the old regime.
Leave Travel Allowance / Leave Travel Concession is a type of allowance given to employees for travelling to any place in India. It forms part of your salary structure, and it can be used as a tax reduction tool, since deductions are provided under section 10(5) of the Income Tax Act.
Only individuals (residents and non-residents) can claim LTA for travel costs incurred on tour within India. Expenses can be claimed for self and family. Family includes the following:
A pictorial representation of the above limit is explained below.
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.
LTA exemption is available for only two journeys performed in a block of four calendar years.
Consider the below example for a better understanding:
• Where carry over exemption is claimed in the first calendar year of the immediately succeeding block
Journey Month | Block Year 2018-21 | Block Year 2022-25 |
April 2019 | Exemption claimed | NA |
March 2021 | Exemption not claimed | Carried forwarded to next block |
May 2022 | No Journey undertaken. | Exemption not claimed on preceding block can be claimed in FY 2022-23 |
• Where carry over exemption is not claimed in the first calendar year of the immediately succeeding block
Journey Month | Block Year 2018-21 | Block Year 2022-25 |
April 2019 | Exemption claimed | NA |
June 2019 | Exemption claimed | NA |
March 2021 | Exemption not claimed | Carried Forward |
January 2022 | No Journey undertaken. | NA |
January 2023 | No Journey undertaken | Exemption cannot be claimed for march 2021 journey as the first year of the immediately succeeding block expired. |
There are various deductions are exemptions that are restricted under the new regime. LTA is one such deduction. Leave Travel Allowance is not available under the new tax regime. Therefore, you have to opt for old regime to claim exemption of leave travel allowance.
Many organizations 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.