What is an LTA, or leave travel allowance?
A portion of an employee’s pay known as leave travel allowance, or LTA, pays for travel costs while they are on leave. Only domestic travel for employees and their families is covered by the employer.
According to Rule 2B of the Income Tax Act of India, Section 10(5), the LTA and any associated conditions are tax-exempt. Employees who opt for the New Tax Regime, however, are not eligible.
For instance, take Rohan, whose company pays him ₹20,000 in Leave Travel Allowance (LTA). His true travel costs, however, barely come to ₹15,000. Rohan’s exemption in this instance is restricted to the ₹15,000 that he really spent on travel. Meals and lodging are not covered by this exemption, which only applies to costs directly associated with travel, such as transportation.
Who is qualified to receive leave travel benefits?
A leave travel allowance can be claimed by any paid person who has incurred travel expenditures while on a scheduled leave of absence. When traveling within the nation, it can be used for a minimum of three days off. Your supervisor must first approve your leave in order for you to get payment.
The shortest distance between two locations is covered under the LTA exemption. The exemption does not apply to international travel and is limited to the economy fare of Air India for the quickest route to the destination. It applies to the worker and their family, up to a maximum of two kids.
Which block period is the latest for claiming an LTA exemption?
The tenth block year, 2022&ndash2025, is the latest block year during which an LTA exemption can be claimed. Within four years, the tax exemption may be claimed twice.
Is the leave travel benefit subject to taxes?
No, under the Income Tax Act of 1961, the leave travel allowance is not taxable up to INR 36,000 (round trip). As long as it satisfies the requirements outlined in the Act, LTA is a great way for employees to save money on taxes.
Please take note that leave travel allowance is taxed under section 115 BAC of the Act (NPTR) for workers who have selected the New Tax Regime.
How do workers apply for LTA benefits?
Employees must first confirm with their employer if the LTA component is included in the CTC or the pay stub before claiming benefits. The guidelines for collecting LTA benefits are as follows:
- After completing the necessary application forms and supplying any supporting travel documentation that your employer requests, you can claim tax benefits.
- After completing the intended trip’s return travel, employees are eligible to receive LTA.
- Workers are required to present proof of travel, such as travel tickets and GST receipts.
- If they would like, employees can file LTC claims for the remaining family members based on certification within the same block and for select family members with proof of travel.
- The LTA amount is taxable in accordance with your income tax bracket and is included in your salary if an employee does not travel.
