The Income Tax Act, 1961 gives different exemptions to salaried class apart from deductions like LIC premium, housing advance revenue and so on While the deduction is a reduced thing from a total taxable income, exemption implies exclusion from total taxable income. Such exemptions empower the employers to structure the Cost to Company (CTC) of employees in a tax-efficient way. One of such exemptions accessible to salaried class under the law and furthermore generally utilized by employers is Leave Travel Allowance (LTA)/Leave Travel Concession(LTC). LTA exclusion is likewise accessible for LTA received from previous manager w.r.t travel after the retirement of service or end of service
Contents
As it is clear from the name it is an exemption for allowance or assistance which is received by the employees from his employer for traveling on leave. It may sound very easy but many things are needed to be kept in mind while planning the travel for claiming leave travel allowance exemption. Various provisions are available in income tax act which lays down provisions for claiming exemption of leave travel allowance.
Leave Travel Concession or allowance is an essential part of the salary structure and also acts as a great tax saving tool under the provisions of the Income Tax Act,1961.
There are certain conditions or requirements which are needed for claiming exemption. The conditions are as follows:
The LTA exemption is only available on the actual costs which include air, rail, or bus fare which is incurred by the employee in his travel journey. No expenses which include sightseeing hotel accommodation, food, etc are included in this exemption. The exemption is also limited to the LTA which is provided by the employer
For instance, if the LTA provided by the employer is Rs.40,000 and the actual eligible travel cost which is incurred by the employee is Rs.20,000. In this case, the exemption is available only to the extent of Rs.20,000 and the balance which is of Rs.20,000 will be included in the taxable salary income of the employee.
Leave Travel Allowance exemption is accessible for travel allowance which is provided by the employer to the employee and his family. The exemptions are the following:
The leave travel allowance can only be claimed for only two journeys which are performed in a block of four calendar years. So it means that it can not be claimed on every vacation.
Block year is not as same as the financial year it is different from the financial year. The government decides the leave travel exemption purpose. The first 4 block year started in 1986. The block years are 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-2005, 2006-2009, 2010-13, etc. the block that is applicable for the current period is the calendar year 2018-21.
The procedure which is needed to claim to leave travel allowance is employer-specific. Employer announces the last date in which the leave travel allowance can be claimed by the employees and which may require employees to furnish travel proof like a boarding pass, tickets which need to be provided by the travel agent with the mandatory certificate. It is not compulsory for employers to collect travel proof but it is always for employees to keep duplicates for their records and to also submit to the employer which is based on the leave travel allowance policy of the company or the tax authorities when demanded.
Income tax provision gives exemption w.r.t travel cost brought about on leave to any place in India. Conditions relating to the mode of transport likewise make reference to the spot of ‘origin’ to the spot of ‘destination’ and the route which should be the briefest accessible route.
Consequently, if a worker is traveling to better places in a solitary vacation, the exemption must be benefited for the travel cost qualified from the spot of origin to the farthest spot in the vacation by the most limited conceivable route.
Leave Travel Allowance (LTA) accompanies a carry forward highlight. You can carry forward your Leave Travel Allowance in the circumstance that it has not been utilized. It tends to be presented and guaranteed in the main year of the next block. Here we might want to make reference to that only one LTA can be presented and guaranteed in the principal year of the next block. For example, “the 4-year block for your LTA is 2014-2017. During that period, assuming you didn’t guarantee LTA or asserted it just a single time, you will be permitted to carry forward one LTA to 2018 (first year of next block, for example, 2018-21). Hence, from first Jan 2018 to 31st Dec 2021, you will actually want to guarantee LTA multiple times.
If an individual switches jobs he can still claim for leave travel allowance not only from the current organization but also from the previous employer if the concession is not unutilized. For instance, in the 2010-2013 block the individual claimed leave travel allowance in 2011 and in 2012 the individual switched his job. In that case the said individual can still claim his second journey from his new employer.
-To claim the benefit of leave travel concession or leave travel allowance the employee has to furnish the following documents to the employer:
-The first document which needs to be submitted is the Leave Travel Allowance Form
-Travel bills, boarding passes, flight or rail tickets, and other related documents.
When the Leave Travel Concession claim is submitted and is approved by the employer then the employer issues Form 16 which will contain all the necessary details of the allowance which is paid for. The other expenses which are incurred on travel will be taxable.
Related Posts