leave travel allowance income tax rules

Most companies have LTA as part of the tax free compensation offered to employees to save on income tax. Leave travel allowance is tax free and there is no need to pay income tax on the amount availed under LTA subject to conditions.

The following conditions apply to LTA amount if it has to be non taxable.

The amount spent on the journey undertaken from source to destination point by the shortest path. Only travel tickets form the non taxable part and hotel stay, local travel and other food expenses are  not covered in this. If you have claimed  LTA of Rs 50,000 from your company as per your entitlement and spent Rs 20000 only on to and fro tickets then on Rs. 20,000 is non taxable, the balance Rs. 30,000 becomes taxable.

The travel amount consists of  travel expenses of self and dependent parents and children for travel in India only. Travel expenses for travelling outside India are not exempted from tax. Travel can be of any mode air, road or train travel in any class as per entitlement.

Income tax exemption on LTA can be availed two times only in a block of four years. The current block is 2010-2013. For example if you get LTA of Rs 25000 every year in part of salary  it can be combined for two years i.e. Rs 50,000 and availed once in two years. If you don’t claim this amount your company will deduct Income Tax on this as per your slab and deposit the balance amount tn your account at the completion of financial year.

Your company may ask for travel proofs to validate your tax rebate claim on LTA

IF you are unable to avail LTA two times in the current block, you can carry forward this to the next block’s first year only.

3 comments to leave travel allowance income tax rules

  • Pratibha

    As you said, Income tax exemption on LTA can be availed two times only in a block of four years
    Consider the current block is 2010-2013.
    If you get LTA of Rs 25000 every year in part of salary it can be combined for two years (2010 & 2011) i.e. Rs 50,000 and availed once in two years.
    Now my question is- Can you avail benifit of (2012 & 2013) of accumulated LTA of Rs 50000/- again. I hope we can because as per rule I have claimed for exemption only two times in block of four years.

    Please clarify..

  • what if the journey is performed in Jan 14, will it be claimed in block 2010-13 or in block 2014-17 because both blocks fall in different financial year (13-14 & 14-15 respectively).

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