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The other day my colleagues and I were discussing about LTA and I realized that no one really knows everything about LTA. People are not clear as to when they can claim it, what can they claim as part of LTA or for whom they can claim it. Here we have attempted to demystify LTA and explain the rules around it.
LTA stands for Leave Travel Allowance and is a component of one’s salary. It is given to salaried persons wherein if they travel they can claim the money spent on the same. The Income-Tax department allows you to claim tax exemption on this claimed amount twice in a block of four calendar years. It is a good tax saving device for salaried employees.
- LTA can be claimed only for cost of travel. It can be claimed for bus, car, air or train travel. It does NOT include money spent on sightseeing, food or hotel accommodation etc.
- LTA can be claimed twice in a block of 4 years. The blocks are decided by the government. The current block is January 2010-December 2013. As you can see, calendar years are considered here. If you miss claiming LTA in one block, it can be carried forward to the first year of the next block.
- LTA can be claimed for the shortest distance from the starting point of the journey till the destination. Moreover if you have a long winding travel plan, the last route will be considered for your claim.
- The travel has to be within India. In most companies, you need to submit proof of travel. If the travel is by train, train tickets are to be submitted as proof and maximum amount allowed is the 1st class AC fare. If you have travelled by air, the Economy class air fare of the National carrier by the shortest route or the amount spent which ever is less can be claimed. Please ensure that you submit the boarding pass as well. If you have used some car rental services, the relevant bills have to be submitted.
- You should also ensure that you have applied for leave during that time.
- LTA can be claimed for family which can consist of spouse, children, dependent siblings and parents. You cannot claim it for your family if you are not part of the travel.
- If two people in a family are part of the salaried class, only one of them can claim LTA for one travel.
- If you cannot claim for LTA, you will get the LTA amount that you are eligible, post tax deduction on the same.
Hope this has helped you in decoding LTA and the policies associated with it.
Summary
LTA stands for Leave Travel Allowance and is a component of your salary. It is paid along with the salary but one is exempt from tax on this amount provided one travels as per the rules and submits the required proof by claiming for the same.
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