Leave Travel Allowance (LTA) tax exemption/ concession, claim procedure

Leave Travel Allowance definition

With the onset of New Year, its time to claim annual reimbursement like Medical and Leave Travel Allowance. This reimbursement is best for tax saving financial product. Income from LTA or medical component is tax free. You just have to submit important documents/ bills. According to Section 10 (5) of Income Tax Act, any employee can travel anywhere in India on his earned leave. Then he can claim tax exemption on travel expenses.

LTA is a part of salary package of an employee. It includes expenses related to air/train/bus ticket or hiring a vehicle. But you cannot include accommodation and such other expenses. The package includes expenses incurred on employee himself as well as his spouse, children (maximum 2 children) and dependents. Please note that employee cannot take tax exemption on LTA every year. He can take claim only in alternate years or for continuous two years. You can carry forward your journey in one year to next block. In other words, you can claim for your travel expenses in next year which were incurred in previous year. (What is block for LTA purpose. Present block was started in 1 January, 2010 and will last till 31 December, 2013.) However, it is suggested that claim should be done in first year of next block. Company determines a limit of LTA. You can claim tax free reimbursement maximum to that limit.

What should be done if travel expenses are less than LTA component

If your travel expenses incurred as less than your LTA component, then tax will be levied on remaining amount according to your income tax slab bracket. Thus the remaining amount will be credited in your account after deducting tax. For example, if you had gone through air travel, then benefit of tax exemption provided will be equal to fare applicable on shortest route in economy class of National Aviation Company. In case of rail or road travel, tax benefit can be taken on amount equivalent to fare applicable on shortest route in AC first class coach. If you have traveled at multiple places, then farthest place from your house will be considered for calculation of tax exemption.

How to claim LTA

To claim medical expenses or LTA, you have to show the original receipt of ticket and travel bill along with form to claim LTA. If you miss to claim LTA from your company, then you can file claim for exemption at the time of filing Income tax return.

In such a case, you will get tax refund later. But this process is full of headache and hosed be avoided.

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Leave Travel Allowance (LTA) tax exemption/ concession, claim procedure

Leave Travel Allowance definition

What should be done if travel expenses are less than LTA component

How to claim LTA

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