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  • How to Claim Your Leave Travel Allowance?
  • Post author: fincart
  • Post published: October 20, 2023
  • Post category: Income Tax

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We all like traveling these days, don’t we? Every year we all plan to make at least one trip. But little do we know that we could claim one of the allowances if provided by your employer. It could also help you to save taxes too!  But how do you claim it? Can you claim it every year? How much amount does it cover? What is included in this? Is there an eligibility criterion to claim this allowance?

Tax deductions and exemptions provided by the Income Tax department have allowed us to save the most amount of tax possible. By using these exemptions, employers can structure employee Cost to Company (CTC) in a tax-efficient manner. Leave Travel Allowance (LTA) is an exemption available to salaried workers under the law that is also widely used by employers.  

When planning travel to claim an LTA exemption, many factors need to be considered. LTA exemptions are governed by income tax provisions: 

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) is an allowance provided by employers to employees who are on leave from work to cover their travel expenses. By the Income Tax Act, of 1; 961, LTAs are an important component of an employee’s salary, as they are eligible for income tax exemptions, making them a valuable tool for tax saving . LTA received by the employee during the year will not be included in his net income under Section 10(5) of the Income Tax Act.

Example of LTA

Assume that LTA granted by your employer is Rs 30,000, and the actual travel cost is Rs 20,000, then only Rs 20,000 will be available as an exemption and the balance of Rs 10,000 would be included in taxable salary.

Take another example, suppose the Leave Travel Allowance provided by the employer is Rs 25,000. The actual expenses spent on travel are Rs 30,000. Here, the LTA exemption allowed would be Rs 25,000 irrespective of a higher amount spent on travel.

Benefits of Leave Travel Allowance

Tax Exemption : LTA provides tax benefits as the amount spent on eligible travel expenses is exempt from income tax.

Family Inclusion : The allowance covers immediate family members, promoting family travel and bonding.

Domestic Exploration : Encourages employees to explore different parts of India, contributing to tourism and cultural exchange.

Reimbursement : Allows reimbursement of actual travel expenses or up to specified limits, easing financial burden on employees.

Employee Well-being : Promotes work-life balance by facilitating quality time with family during approved leave periods.

Conditions to claim Leave Travel Allowance exemption

The following conditions must be satisfied for claiming an LTA exemption:

  • You can claim LTA for travel costs incurred for yourself and your family.
  • LTA can be claimed for any two years in a block of 4 years. The current block year for claiming LTA is 2022 to 2025.
  • Actual journey is a must to claim the exemption.
  • The exemption is available only on the actual travel costs i.e., the air, rail or bus fare incurred by the employee. Local conveyance, sightseeing, hotel accommodation, food, etc., are not eligible.
  • The exemption is also limited to LTA provided by the employer.
  • It applies to travel only within the country.

What is the eligibility of LTA exemption?

The LTA (Leave Travel Allowance) exemption for tax purposes is based on the actual travel cost. It covers expenses for a journey from the employee’s origin to the destination and back, using the shortest route by air, rail, or bus. Only the cost of travel tickets is eligible for exemption. Other expenses like conveyance, sightseeing, accommodation, shopping, and food are not allowed. If the employer’s LTA allowance is less than the actual travel cost, the exemption is limited to the employer’s provided amount.

Documents required for claiming LTA

To claim LTA, fill out the LTA application form supplied by your employer, including essential details like travel date, destination, mode of transport, and incurred costs. Alongside the application, submit supporting documents such as tickets, boarding passes, and invoices as evidence for your LTA claim. These documents are crucial to validate your travel expenses and support your application.

LTA Exemption Rules for Various Modes of Transport

The LTA claim depends on the mode of transport.

  • If travel is by air, the LTA limit is Actual Expenses or Economy class air fare of the national carrier by the shortest route to the place of destination, whichever is lower.
  • If travel is by rail, the LTA limit is Actual Expenses or first-class AC rail fare by the shortest route to the place of destination, whichever is lower.
  • If travel is by a recognized public transport system, the LTA limit is Actual Expenses or 1st class/ deluxe class fare by the shortest route to the place of destination, whichever is lower.
  • If no recognized public transport system is available, the LTA limit is Actual Expenses or first-class rail fare by the shortest route to the place of destination, whichever is lower. (It is assumed as if the journey had been performed by rail.)

How Much Leave Travel Allowance Exemption Will You Get?

There is a limit on how much LTA an employer may provide as an exemption. For instance, if Rs. 30,000 of LTA is granted by your employer and the actual travel cost incurred is Rs. 20,000 by an employee then the exemption will only be available till Rs. 20,000. Therefore the balance of Rs. 10,000 will be included in the taxable salary income.  Procedure to Claim LTA

LTA claims are generally handled by employers. Employers announce the deadline for employees to claim LTA and may require employees to submit proof of travel along with the mandatory declaration, such as tickets, boarding passes, invoices from travel agents, etc. Although employers don’t need to collect proof of travel, it is always advisable for employees to keep copies for their records as well as to submit them to their employer on demand based on the LTA policy of the company.

What Happens to LTA If There is No Traveling Involved?

Because the LTA is part of your salary structure, it is automatically credited to your account regularly. If you do not travel or do not have valid proof of travel, you cannot claim the LTA received for tax exemption purposes. Your net taxable income will be increased if you receive an LTA.

What expenses can be included under LTA?

Under the Income Tax Act, LTA (Leave Travel Allowance) can include the following expenses:

Travel Expenses : LTA encompasses the travel costs for the employee and their immediate family members (spouse, children, and dependent parents or siblings). The travel can be by air, rail, or public transportation, following the employer’s or Income Tax Department’s specified rules.

Destination : LTA is applicable for travel within India. Employees can claim expenses incurred on traveling to any location in India during their leave period.

Mode of Travel : LTA covers expenses for travel by air, train, or other public transportation. Reimbursement is based on the actual amount spent or as per limits set by the employer or tax authorities.

Leave Period : LTA can be claimed for travel during the employee’s leave period, including annual leave, casual leave, or any other approved form of leave.

Unclaimed LTA

Unclaimed LTA is allowed to be carried forward. If an employee has not availed LTA exemption once or twice in a block of 4 years, he is allowed to carryover one exemption to the next block provided he avails this benefit, in the first calendar year of immediately succeeding block.

For example, during the 4-year block of 2014-2017, if you did not claim LTA or claimed it only once, then you will be allowed to carry forward one LTA to 2018 (first year of next block, i.e. 2018-21). Thus, from 2018 to 2021, you will be able to claim LTA three times.

Can Unclaimed LTA be Carried Over to the Next Block Year?

Under the carry-over concession rules, under which the employee can claim LTA tax breaks on three journeys made in the current block of years if he hasn’t claimed LTA in the last running block or has just claimed it once, the employee can still claim one additional LTA in the next block of calendar years. To utilize the carryover concession facility, one LTA exemption for the journey must be claimed during the first calendar year of the next block.

For instance, in the last block of the year, between 2018-2021, you made only one tax exemption claim under LTA as an employee. Therefore, you become eligible for LTA claims for up to 3 journeys in the current block, between 2022 and 2025. However, your first claim must be filed in the first calendar year of the current block, i.e. in 2022.

Also Read: Smart Tax Planning Strategies for High Earners

Leave travel allowance is an amount provided by the employer to the employee for Travelling while on Leave. This is a part of your salary which is exempted from tax.

Employees in India are generally eligible for LTA. To claim LTA, employees must undertake travel during their leave period, and the exemption is subject to specified conditions and limits set by the income tax regulations.

Under LTA, expenses related to travel within India are covered. This includes the cost of transportation by air, rail, or bus for the employee and eligible family members.

LTA can be claimed for two journeys in a block of four years and not on every financial year.

The concept of “block years” in the context of LTA (Leave Travel Allowance) refers to a four-year block set by the income tax authorities. This block consists of four consecutive calendar years, during which an employee is allowed to claim LTA for up to two trips.

No, LTA (Leave Travel Allowance) is specifically applicable for domestic travel within India.

For LTA exemption, the costs incurred for family members traveling with the employee are allowed. Family members include spouses, children, dependent parents, and dependent siblings.

The exemption can be claimed for up to two children if born on or after 1st October 1998.

LTA exemption is calculated as the least of the actual travel expenses incurred on a trip within India or the fare of the equivalent journey by the shortest route in the chosen mode of transportation (air, rail, or bus). Again, it is limited to the LTA component in your compensation package or CTC.

If an employee doesn’t travel at all or lacks valid proof of travel, they cannot claim LTA for tax exemption purposes. In such a scenario, the received LTA amount is treated as a part of the employee’s taxable income.

If an employee does not fully utilize their LTA entitlement in a particular block of four years, it can be carried over to the next block. But the employee is usually required to utilize this carryover LTA in the first calendar year of the immediately succeeding block.

If the unutilized LTA is not claimed within the first year of the next block, it will expire and would not be allowed to be claimed later on.

Yes, there is a specific deadline for employees to claim LTA. Usually, LTA can be claimed for exemption twice under the block of 4 years.

No, LTA (Leave Travel Allowance) is specifically designed for personal travel during leave periods and cannot be claimed for business trips or official travel.

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LTA (Leave Travel Allowance): Meaning, Rules, Tax Exemptions and Conditions to claim

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Hiral Vakil

Travelling offers a wide range of benefits. Taking time away from daily routine can reduce stress and improve mental and emotional well-being. However, vacations can be expensive. Income Tax provides various exemptions on such expenses to salaried individuals. One such exemption available is LTA i.e. Leave Travel Allowance. LTA is an allowance employers give to their staff for vacations in India.

LTA: Meaning

Conditions to claim lta exemption, leave travel exemption: eligibility, how to claim exemption on leave travel allowance.

Leave Travel Allowance is an allowance employers give to their employees as a part of CTC for travelling alone or with family to any place in India : 

  • either on leave or
  • after retirement from service or
  • after termination of service.

Income tax has laid down rules for claiming exemption of LTA.

leave travel allowance in ctc

Section 10(5) of the Income Tax Act along with Rule 2B has prescribed the conditions and limit of exempt leave travel allowance.

  • Leave travel allowance should be a part of the employee’s salary structure.
  • An exemption is available for actual expenses incurred by the employee including their family for domestic travel only.
  • Spouse and children
  • Parents, brothers, and sisters who are wholly or mostly dependent on the employee.
  • Further, this exemption can be claimed for a maximum of two children born after 01/10/1998. For children born prior to this date, there is no restriction.
  • It covers only the cost of travel for the trip (travel by rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
  • An exemption is available only for two trips in a block of four calendar years . The current block for leave travel is from 2022 to 2025.
  • If an exemption is not availed during the block period, it can be carried over to the next block and used in the first year of the next block.

leave travel allowance in ctc

Let’s understand with an example:

Let’s say, an employee does not avail Leave Travel allowance for the block of 2018-2021. He is allowed to carry forward a maximum of one unavailed LTA to be used in the succeeding block of 2022-2025. Accordingly, if he avails LTA in April 2022, the same will be considered for the block of 2018-2021. Therefore, he will be eligible for exemption in respect of that journey and two more journeys can be further availed in respect of the block 2022-2025.

The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accommodation, food, etc are not eligible for this exemption. It is also limited to the LTA provided by the employer. For example: If the actual expense incurred is INR 50,000 but LTA as part of Salary is INR 35,000 then the maximum exemption available would be INR 35,000 only.

Exemption when various modes of transport are used for travel

Employees can claim Leave Travel Allowance exemption by submitting details in Form 12BB . They should submit the proof in support of their claim. Further employees can submit boarding passes, air tickets, train tickets, invoices from travel agents, etc, as documentary proof to their employers.

leave travel allowance in ctc

No, LTA can be claimed only for domestic travel. You can only claim LTA if the Employer provides it as part of your salary.

If an employee travels to different locations on a single vacation then the exemption available will be for the travel cost eligible from the place of origin to the farthest location by the shortest route possible.

It depends on the organisation’s policies as many companies allow LTA exemption only if employees take specific leave for vacation and not on official holidays or weekends.

No, You can claim LTA exemption only twice in a block of 4 calendar years. The current block of four years is 2022-2025.

Employees are advised to maintain proof such as flight tickets, invoices from travel agents, passes, etc. as they have to be submitted to the employer.

Employees can know the exempt Leave Travel Allowance amount from Form 16 issued by the employer at the end of the financial year. It is exempt u/s 10(5) of the Income Tax Act.

Since Leave Travel Allowance is a part of salary income, an employee can file ITR-1 while claiming exempt LTA. However, salaried need to file ITR-2 if their income is more than Rs. 50,00,000.

Got Questions? Ask Away!

Hey @sushil_verma

There are a wide range of deductions that you can claim. Apart from Section 80C tax deductions, you could claim deductions up to INR 25,000 (INR 50,000 for Senior Citizens ) buying Mediclaim u/s 80D. You can claim a deduction of INR 50,000 on home loan interest under Section 80EE.

Hey @Dia_malhotra , there are many deductions that you can avail of. Your salary package may include different allowances like House Rent Allowance (HRA) , conveyance , transport allowance, medical reimbursement , etc. Additionally, some of these allowances are exempt up to a certain limit under section 10 of the Income Tax Act.

  • Medical allowance is exempt up to INR 15,000 on a reimbursement basis.
  • Children education allowance is exempt up to Rs. 200 per child per month up to a maximum of two children.
  • Conveyance allowance is exempt up to a maximum of Rs. 1600 per month.

Tax on employment and entertainment allowance will also be allowed as a deduction from the salary income. Employment tax is deducted from your salary by your employer and then it is deposited to the state government.

The benefit Section 80EEB can be claimed by individuals only. An individual taxpayer can claim interest on loan of an electric vehicle of up to INR 1.5 lacs u/s 80EEB. However, if the electric vehicle is used for the purpose of business, the vehicle should be reported as an asset, loan should be reported as a liability and the interest on loan can be claimed as a business expense irrespective of the amount. (We have updated the article with the changes).

Thus, if you have a proprietorship business, you should claim interest amount as a business expense only if the vehicle is used for business purpose. However, if it is used for personal purpose, you can claim deduction of interest u/s 80EEB in your ITR since you would be reporting both personal and business income in the ITR (under your PAN).

As per the Income Tax Act, the deduction under Section 80EEB is applicable from 1st April 2020 i.e. FY 2020-21.

:slight_smile:

No issues. You’re welcome!

Hey @shindeonkar95

In case of capital gain income (LTCG/STCG), transfer expenses are allowed as deduction, except STT.

However, in case of business income (F&O, intraday), all expenses incurred for the business (including STT) are eligible to claim deduction in ITR.

Hope, it helps!

Is it possible to claim deductions under S. 80CCF for Infra bonds bought in the secondary market and held to maturity?

There were a number of 10 year infra bonds issued in the 2010- 2013 period, which will start maturing soon. These are all listed on the exchanges (although hardly any liquidity or transactions in them). If I were to buy some of these bonds in the open markets and hold them in my demat to maturity (<3 years), is it possible to claim tax deductions (upto 20k per year) under 80CCF for buying?

I couldn’t find anything on this. Any help is appreciated.

Hello @Veejayy ,

Yes you can claim deduction under 80CCF for investment made in specified infrastructure and other tax saving bonds bought in the secondary market and held to maturity.

Deduction under Section 80CCF can be availed only through investment in certain tax saving bonds, issued by banks or corporations after gaining permission from the government which shall be restricted upto 10,000 per year.

These bonds are generally long term bonds, having tenure of more than 5 years with a lock in period of 5 years in most of the cases. These bonds can be sold after the lock in period!

Also, interest earned on these bonds will be taxable.

Hope this helps!

Hi, I need to file my income tax for FY21, I am using Quicko platform for filing, I wanted to confirm if the ELSS investment amount for the FY21 is to be added in the section 80C, since I already the amount of Rs30,072 , should I add my ELSS amount to this existing amount and submit the total

Hey @Sheirsh_Saxena , yes, the investment amount needs to be added under 80C.

Continue the conversation on TaxQ&A

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What is leave travel allowance? How do I use it?

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By Future Generali Updated On Jan 10, 2023

What is leave travel allowance? How do I use it?

Salaried employees who get leave travel allowance as a part of their CTC, can claim a tax deduction on the expenses incurred during the travel. The tax deduction can be claimed for travel for self and members of the family (includes spouse, children and parents, brother, sister, if wholly dependent on assessee ) for the journey undertaken within the country. The exemption is subject to certain terms and conditions as -

This exemption does not apply to any additional local transportation, sightseeing, hotel accommodations, meals, or other expenses. The lower of the two exemptions will be allowed:

  • The employer provides LTA.
  • Exemption based on expenses incurred or the applicable amounts subject to the conditions covered above for each method of transportation.

You are eligible to claim exemption for LTA if you are going on a vacation subject to exemption limit as specified under the Income Tax Act, 1961. This exemption applies to the employee when the journey is performed by rail, aircraft, or bus. The exemption is as below :

  • If traveling by Air : Maximum exemption shall be economy fare calculated by the airlines considering the shortest route to the destination.
  • Where place of origin and destination is connected by Railways and the Journey is performed between such places : Maximum exemption shall be not more than air-conditioned first class rail fare by the shortest route.
  • Where place of origin and destination is not connected by Railways : In case recognized public transport exists, maximum exemption will be of amount not exceeding first class fare of such transport by shortest route. In case recognized, public transport does not exist, amount equal to air-conditioned first class rail fare.

Other than these expenses, there are many other ways a salaried person can enjoy the benefits of the LTA. For instance, if an employee has not availed LTA for a single or two permitted journeys in a particular block of 4 years, then he can carry one journey over to the next block, which means that in the next block he will have three permitted journeys that will qualify for tax exemption but employee need to claim the carried forward journey’s expenses in 1 st year of next block.

How to claim LTA tax exemption?

To claim tax benefits on your LTA, your employer might ask you to fill out certain application forms and attach documents substantiating your travel. In case you don’t travel, the LTA amount gets paid as a part of your salary and will be liable to tax according to the slab you belong to. Therefore, if you don’t take any journey, there is no tax exemption available to you.

What happens when I don't travel or fail to produce travel documents to my employees?

If an employee fails to bring valid proof of travel or does not travel at all, the received Leave Travel Allowance is added to the net taxable income and no deductions will be allowed. Employers don't need to secure proof of travel from their employees. However, if company policy dictates so, they would reserve the right to ask for documentary proof. Hence, employees must keep evidence of travel, such as flight tickets, available and ready to produce. As the documentary proof might also be necessary for tax audits, employees should keep copies of the same with themselves.

Let's assume an employee gets 40000 rs as leave travel allowance and spends 19000 rs as travel expenses then only 19000 rs is allowed for exemption, and 21000 rs, being the amount not spent on journey, is not eligible for exemption.

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How to claim lta from your employer.

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Before availing of the tax benefit on LTA, there are, however, certain other important conditions attached to it. Read on to know them. Do keep in mind that tax exemption on LTA can be claimed in the old tax regime only for FY 2021-22.

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Is leave travel allowance (lta) worth claiming.

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Deb P Samaddar

Created on 05 Nov 2020

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Updated on 17 Aug 2022

leave travel allowance

Shimla, Manali or Goa, where are you traveling for a vacation in the upcoming new year? What if I tell you that by traveling to your favourite destination you can save a lot of tax? Yes, this is true. Now you might be thinking, how is this possible? It is possible in a Leave Travel Allowance.

Several exemptions are being provided under the Income Tax Act, 1961. Like the amount paid on the life insurance policy or interest on the housing loan. In simple words, exemption means freedom from paying taxes on specific components.

These exemptions enable employers to plan cost-to-company (CTC) in a tax-efficient manner. One such exemption is Leave Travel Allowance. Earlier LTA was introduced for PSU employees, but now according to the new rules, LTA can also be claimed by non-central government employees.

Are you eligible to claim this exemption? To what extent you can claim deductions on your travel expenses? In this article, we are going to answer all these questions. This article may help you to decide whether you should claim it or not. Let’s discuss this.

Leave Travel Allowance

Leave travel allowance is an allowance which is provided by the employer to the employee who is traveling on leave from work. It is a part of the employee’s CTC (cost-to-company).

It is exempted in the Income Tax Act, 1961, under section 10(5).

The LTA received by an employee will not be a part of his net income of the year.

In simpler words, LTA is an exemption for allowance received by an employee from his employer for travelling on leaves.

It may sound very simple, but it has several factors that need to be understood before availing such exemption.

Conditions for Claiming LTA Exemption

The several conditions to avail the exemption are:

Actual travel is a must.

Only domestic travel is considered - No Thailand trips will be considered. 

 The exemption is available on the travel of the employee + family. Family include the spouse of the employee, maximum of two children, wholly or mainly dependent parents, and dependent brothers and sisters.

Eligible for LTA Exemption

Suppose you are traveling to avail the benefits of LTA. Now can you expect exemption on your hotel rents? No! That’s because the exemption is available only on the actual travel costs.

This means that you can avail exemption on the air, railway, or bus fare incurred by you. You need to keep your bills and tickets safe. No expenses such as local conveyance sightseeing, food, and so on are eligible for this exemption. The exemption is also limited to LTA provided by the employer.

Let’s understand this with an example.

Suppose LTA given by your employer = 40,000

Your Eligible travel expenses = 30,000

So, your tax exemption = 30,000

The remaining 10,000 will be added to your taxable income, and you will be required to pay income tax on it.

Now suppose, LTA given by your employer = 40,000

Your eligible travel expenses = 50,000

So, your tax exemption = 40,000

Since your employer provides 40,000 LTA, the benefits are limited to it.

Can you Travel Business Class?

You might have thought since the government is giving you LTA on travel, which covers only travel expenses. So, can you travel in a business class and claim the expense? The answer is No!

By Air: If you travel by air, the exempt fare is restricted to economy class fare for the domestic flight. However, the individual can claim their exempt fare for connecting flights if there are no direct flights available.

By Train: If you travel by train, the exempt fair that can be claimed is restricted to the fair of the first class. The individual can claim their exempt fare on the direct trains, except if no direct train is available to your destination. 

By Bus: If you decide to travel by bus, then you can claim exemption limited to the fair of deluxe bus fare. 

Multiple Destination:  Exemption on multiple destinations is not valid. One can claim an exemption for only one destination.

Block of Year

Can you claim LTA exemption every year? No! You can claim only two journeys in a block of four calendar years. The current block year is 2018- 2021. 

What’s New in LTA?

Private sector employees are also allowed to claim LTA in the form of Leave Travel Concession (LTC). According to the new scheme, the individual needs to spend 3-times of the LTC they want to claim. They also need to submit their bills of the expenses to their companies. The same would apply to the LTC cash voucher scheme.

Under the new scheme, employees have a choice to use their LTA for the purchase of electronic goods, home appliances, and other consumer products that attract a goods and services tax (GST) rate of 12 percent or higher. Individuals need to make these purchases before 31 March 2021. Also, Individuals need to make digital payments for these goods and services to redeem this exemption.

Should you avail this facility?

If you were already planning such an expense, then it is an excellent opportunity for you to avail the exemption and save taxes. However, if you are making purchases only to avail exemption, then this might not be a good idea as this might affect your cash flows. You need to take the decision wisely.

The Bottom Line

It is clear from the scheme of the government that they are trying to boost consumption in the economy. Due to significant cuts in the salaries of several employees, the demand has been lower for consumer products like electronic goods.

This income tax benefit might lead to a rise in consumption. This might be beneficial for some, so make sure that you do your tax planning wisely.

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leave travel allowance in ctc

Leave Travel Allowance (LTA): Benefits, How It Is Calculated and Exemption

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Last Updated on May 24, 2022 by

Employers provide various allowances to their employees that form a part of their overall salary package. One such allowance is the leave travel allowance, also known as leave travel concession. What is best is that you can claim a deduction on this amount while filing your taxes. Let us understand the provisions of the Income Tax Act regarding LTA.

Table of Contents

What is a leave travel allowance?

Employers provide their employees with Leave Travel Allowance (LTA) as part of their CTC. This is given for the purpose of travelling while on leave. Section 10(5) of the Income Tax Act, 1961 provides the rules regarding LTA and how you can claim a deduction on it while filing your tax returns . 

Let us see how and when it is allowed. 

What are the conditions to claim a deduction on LTA?

You can claim a deduction for the leave travel allowance subject to the following rules:

  • There were expenses on an actual journey. The journey can be via any mode of transport, including air, rail, and road.
  • You cannot claim expenses on any other expenses during the journey. For example, expenditure on your hotel stay, lunch, or sightseeing cannot be deducted.
  • You can only claim the deduction on domestic travel. International travel is not included under this provision.
  • You can claim your travel expenses and those of your family if they are travelling with you. For this purpose, ‘family’ includes your spouse, children, dependent parents, and siblings.
  • The claim can be made only for two children if they are born after 1 October 1998. If a child is born prior, no such restriction is applicable. 

How much can you claim as a deduction?

The Income Tax Act has prescribed limits on the amount that can be claimed as a deduction. It is as follows:

1. Air travel

The maximum amount you can claim is limited to the economy fare of the national carrier’s airline. You must take into account the cost of the shortest path to your destination.

2. Travel between places connected by rail

If the two locations are connected by rail, the deduction amount is determined as follows: 

  • The price of a first-class AC ticket for the quickest route to the destination.
  • The amount actually spent.

Whichever is less. Except for air travel, this applies to all types of transportation. So, whether you’re travelling by rail or by car, you must adhere to this guideline.

3. Travel between places not connected by rail but other modes of public transport

In this case, the amount of deduction is taken as the lower of the following:

  • The fare of a first-class or deluxe class ticket of the recognised mode of travel. The price for the shortest route is taken.
  • The actual amount spent.

4. Travel between places not connected by any recognised mode of public transport

In such a case, assume that the distance is covered as if you travelled by train. The amount of deduction is restricted to the first-class AC rail fare. The distance covered via the shortest route is considered.  

5. Travel to multiple destinations

Moreover, you may be travelling to multiple places on your journey. Here, the exemption will be calculated based on the travel fare of the shortest route between the place of origin and your farthest destination.

How to claim the deduction on LTA?

To claim the deduction, you must first have valid proof of the expense. This can be the rail or bus ticket, your flight’s boarding pass, or any such document. The rules regarding LTA are determined mainly by the employer. In fact, the Income Tax Act does not make it necessary for you to maintain valid proof. However, you must always keep it handy as you may require to furnish it to the employer or tax authorities. 

Moreover, you cannot claim a deduction on LTA every financial year. You can only claim it for two journeys in a block year. 

But, what is a block year? Let us explain it in detail.

A block year is a set of 4 calendar yrs. The government determines it for the purpose of calculating LTA claims. This was first established in 1986, making the first block period from 1986 to 1989. At present, the block period applicable is between 2022-2025. 

If you do not claim LTA in a block year, it can be carried forward to the next. Let us understand the rules regarding the same.

Carry forward of LTA

The unclaimed LTA on one or two journeys is carried forward to the subsequent block year. However, you must claim the allowance within the first calendar year of the block.

For example, you only make one LTA claim in the 2018-2021 block period. This leaves one unclaimed journey that is carried forward to the 2022-2025 block. You may now claim a total of three LTAs in the current block. However, the carried forward claim must be made during 2022 itself. 

Once you calculate your deduction amount, you can claim it while filing your tax return. Any excess amount on account of LTA forms a part of your salary. This is taxable as per your tax slab .

In conclusion  

Leave Travel Allowance is a part of your CTC that the employer provides. It serves as compensation that you receive while travelling on leave. You can claim a deduction on LTA while filing your tax returns. Such a claim can be made twice in a block year. This allowance proves beneficial for employees seeking some relief on their travelling expenses.

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How to Find Your In-Hand Salary Based on Your CTC

Updated on : Mar 6th, 2023

If you are an employee or a fresher looking for a job, you should know that your offer letter will have details of the Cost to Company (CTC). As the name suggests, CTC refers to the amount that the company bears to hire an employee. CTC will have many components in its total structure; however, understanding each component is complex.

Difference between CTC and gross salary

CTC is the total amount spent by a corporation to hire and keep you as an employee. It covers your pay as well as all of your perks, such as EPF, HRA, medical insurance, gratuity, and other allowances. CTC may also include transportation services, low-interest loans, food coupons, and other benefits.

Gross salary is the amount that remains after subtracting gratuity and EPF from the CTC. The gross salary is always higher than your take-home salary as the amount is calculated before deductions. It includes your bonus, overtime pay, and any other additional benefits offered by your company.

Points to remember for CTC

  • CTC is not your take-home salary. As mentioned, CTC contains many components like house rent allowance, dearness allowance, and other monetary and non-monetary allowances. 
  • Annual appraisals and hikes are usually provided based on your CTC.  
  • There are several components of CTC. However, the components of CTC vary from employer to employer. For instance, government employers can have a different CTC structure compared to private-sector employers.

Components of CTC

  • Grade pay- The government sector usually pays grade pay to its employees. This payment is based on the seniority of the employee.
  • Basic Pay- This is the main component of the CTC structure. It is a fixed component of the salary and usually comprises 40% to 50% of the total CTC. Many other CTC components like contribution to provident fund, gratuity and others are determined by the basic salary.
  • Allowance- Allowance is a fixed amount provided as a part of CTC by the employer to meet a particular type of expenditure incurred by the employee. Allowances can be partially taxable, fully taxable or non-taxable depending on nature. Some allowances depend on the employee’s designation, whereas some are offered to all employees irrespective of designation.
  • Dearness Allowance – Government employers generally provide this allowance as a percentage of basic salary to meet the rise in inflation over a quarter. The % of dearness allowance depends on the inflation rate of the economy. 
  • HRA -HRA is known as a house rent allowance. It is provided as a part of the rent expenditure incurred by the employee for residence. The HRA component offered is different for different cities, even by the same employer. HRA allowance is partially exempt as allowed under the income tax act.
  • Conveyance Allowance – Allowance allowed for incurring the expenditure to travel from home to the workplace.
  • Medical Allowance- This allowance is provided as a part of CTC. One can claim tax exemption against this allowance by submitting medical bills at intervals specified by the employer. Usually, the exemption for medical allowance can be claimed for the medical expenses incurred for self, spouse, children and dependent family members.
  • Leave Travel Allowance- Some employers to provide a leave travel allowance as a part of their CTC. An exemption is allowed for the travel fare subject to conditions as laid down in the act. This year the government has introduced an LTC cash voucher scheme that allows you to claim the benefit of LTA on purchasing goods or services as specified. 
  • Training, telephone, books and periodicals allowances-  Many companies provide a separate portion of the CTC for incurring external training expenditures, mobile bill payments and the purchase of books/periodicals.
  • Special allowances- Some employers offer special allowances to adjust the amount of total CTC given to employees. This is a fully taxable allowance.
  • Provident Fund -A portion of the salary gets deposited in the PF account of the employee. Employer and employee together contribute to the contribution. The contribution to the PF account is 12 per cent of the basic pay. 

The CTC structure can contain other allowances as per the employer’s policy, which may include children's education or hostel allowance, uniform allowance, daily allowance, tour allowance, food coupons etc. An employee can claim the exemption for such allowances by submitting the bills or proofs of expenditure to the employer before the end of the financial year to claim exemption.  

Some employers also include variable compensation like performance bonuses, a percentage of commission on sales etc., as a part of the total salary. 

Calculation of Cost to Company

The salary calculations involve multiple components, so you need different formulas to calculate each aspect of your salary. Here are the most important formulas you must understand:

Gross salary: CTC – EPF – Gratuity Gratuity: (Basic salary + DA) × 15/26 × No. of years you have worked for the company Taxable income: Gross Salary – EPF/PPF Contribution – Tax-free Allowance – HRA – LTA – Health Insurance – Tax-saving Investments – Other Deductions Take-home Salary (Net Salary Post Taxes): Gross Salary – Income Tax – EPF Contribution – Professional Tax

Calculations making your life difficult? Don't worry. Try our take-home salary calculator

How to calculate the monthly in-hand salary?

Your monthly in-hand salary is the amount that remains after all deductions from your gross compensation has been made.

For example, if your CTC is Rs 7.5 lakh and your firm pays you Rs 50,000 as a bonus each year, your annual salary is

Gross Salary = CTC + Bonus = Rs 7.5 lakh minus 50,000 = Rs 7 lakh

To calculate your total salary deductions, do the following:

The yearly professional tax must be deducted from the gross salary. The amount of professional tax varies by state (we'll assume Rs 2,400 in your state).

You must subtract the entirety of your and your company's EPF contributions. Your EPF contribution is matched by your employer. EPF contributions are determined based on a monthly salary of Rs 15,000 maximum. Your monthly EPF contribution = 12% of Rs 15,000 = Rs 1,800

Your yearly EPF contribution = Rs 1,800 x 12 = Rs 21,600

Your company's annual EPF contribution is Rs 21,600

Let’s assume your employee insurance deduction is Rs 2,000 per year.

Professional tax + EPF (employer + employee) + insurance = Rs 2,400 + Rs 21,600 + Rs 3,000 = Rs 48,600.

Overall annual take-home pay = gross salary - total deductions = Rs 7 lakh - Rs 48,600 = Rs 6,42,400.

Monthly take-home pay = Yearly salary divided by 12 = Rs 6,42,400 divided by 12 = Rs 53,533.

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  • Leave Travel Allowance

LTA - Travel Grant - Laws, Claims, Eligibility, Tax Exemptions and Recent Updates

The Income Tax Act, 1961 provides for various exemptions from the paid class other than deductions such as LIC premiums, interest on mortgages etc. Although deduction is a deduction from all taxable income, exempt means deducting all taxable income. Such exemptions enable employers to arrange a Cost to Company (CTC) for employees in a tax-efficient manner. One such exemption available in the paid category under the law and which is widely used by employers is Leave Travel Allowance (LTA) / Leave Travel Concession (LTC). LTA exemptions are also available on LTA received on the employer's previous trip after the termination of service or termination of service.

  • What is Leave Travel Allowance (LTA)?
  • Conditions for Claiming LTA
  • Eligible LTA Exemption
  • Procedure to Claim LTA
  • Multi-Destination journey
  • LTA Exemption for Vacation on Holidays

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1. What is Leave Travel Allowance (LTA)?

As the name itself suggests, it is an exemption from the benefits/assistance that an employee receives from his or her employer on leave. Although it sounds simple, many features need to be remembered before planning a trip in order to seek release from LTA. The provision of income tax has set rules regarding the requirement for exemption from the LTA.

2. Conditions for Claiming LTA

Let's understand the conditions / requirements for exemption.

  • Real travel is a must for freedom
  • Only home travel is considered free, that is, travel within India. No international travel covered under LTA
  • Exemption from travel is available to the employee alone or with his or her family, where the ‘family’ includes the employee’s spouse, children, and fully or generally dependent parents, brothers, and sisters. In addition, such exemptions are not available for more than two employee children born after 1 October 1998. Children born before 1 October 1998 have no restrictions. In addition, in cases of second births after having one child they are also not affected by this limit.

3. Eligible LTA Exemption

Can LTA exemption be claimed on every vacation

No, LTA release is available on only two trips made on a four-year blockchain.

The block year is different from the financial year and is determined by the Government for the purposes of exemption from the LTA. It covers 4 years each. The first 4-year block started in 1986. The list of years of blockade is 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. Active block for the current year 2018-21 calendar year. The previous block was the 2014-17 calendar year.

Carrying of Unwanted LTA

If an employee has not received a release for one or two trips on any 4-year block, he or she is allowed to transfer that release to the next block as long as he or she uses this benefit, in the first calendar year following the block. Consider the example below to better understand:

• Where carrier release is required in the first year of the next blockchain calendar

• When the overload release is not required in the first year of the next blockchain calendar

• Where carry over exemption is not claimed in the first calendar year of the immediately succeeding block

4. Procedure to Claim LTA

The LTA claim process is usually employer-specific. Every employer announces a deadline on which the LTA may be required by employees and may require employees to submit travel documents such as tickets, boarding passes, invoices provided by the travel agent, etc., and mandatory declaration. Although it is not mandatory for employers to collect travel documents, it is always advisable for employees to keep copies of their records and submit them to the employer based on the company's LTA policy/tax authorities if required.

5. Multi-Destination journey

The provision of income tax provides holiday travel expenses to any destination in India. Transportation conditions also determine the ‘origin’ location of the ‘destination’ and the route that should be the shortest route available. Thus, if an employee travels to different destinations on the same holiday, exemption can only be achieved at the appropriate cost of travel from the source to the farthest vacation spot in the shortest possible route.

6. LTA Exemption for Vacation on Holidays

Many organizations that strictly adhere to the terms of the income tax plan allow employees to claim the LTA only if the employee applies for leave and leave immediately. Such organizations may reject LTA claims for official holiday or weekend travel.

Frequently Asked Questions

How much should i claim for leave travel allowance or lta.

The amount of LTA release depends on the LTA component of your compensation package or CTC. You can provide travel proof during the block period and claim the amount up to your specified CTC.

What is the latest block period to claim LTA exemption?

The latest four-year blockade period runs from 1 January 2018 to 31 December 2021.

How many trips can I make in one year to claim exemption?

You may want to be exempted from LTA for one trip per year in one calendar year.

Can I claim LTA benefit for travel costs of my family?

You can claim LTA benefits for your travel expenses, your family including your spouse, children, foster parents, brothers and sisters of the employee.

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Blogs > What is Leave Travel Allowance (LTA) – with Rules Exception Calculation [Updated 2020]

What is Leave Travel Allowance (LTA) – with Rules Exception Calculation [Updated 2020]

leave travel allowance in ctc

Leave Travel Allowance (LTA) forms a part of an employee’s total CTC (cost-to-company). Also known as Leave Travel Concession, an employee can claim exemption under section 10(5) of the Income Tax Act, 1961, for expenses incurred for travelling when on leave anywhere on the behalf of the organization within the country. Leave Travel allowance broadly …

Continue reading “What is Leave Travel Allowance (LTA) – with Rules Exception Calculation [Updated 2020]”

Leave Travel Allowance (LTA) forms a part of an employee’s total CTC (cost-to-company). Also known as Leave Travel Concession, an employee can claim exemption under section 10(5) of the Income Tax Act, 1961, for expenses incurred for travelling when on leave anywhere on the behalf of the organization within the country.

Leave Travel allowance broadly categorized into two parts:

  • Any travel concession or assistance received by employee from his employer for himself and his family to cover expenses incurred in travelling while on leave.
  • Any travel concession or assistance received by employee from his former employer for himself or his family to cover expenses incurred in travelling post retirement or termination of services.

What is the current LTA block year?

Leave Travel Concession or LTA block years are blocks of 4 years created by Income Tax Department where exemptions can be claimed twice during each block period. The current or on-going block year is the 9th block year. The 4 years in this block are the years 2018, 2019, 2020 and 2021.

List of the expenses which have been given exemptions under LTA

In case of travel by air

The economy air fare of national carrier by the shortest route or the actual amount spent on travel whichever is less is exempt from tax.

In case of travel by rail

  • The A.C. first class rail fare by shortest route or actual amount spent on travel whichever is less is exempt from tax.
  • If the origin and destination spots of journey are connected by rail but journey is performed by other mode of transport and not air or rail.
  • The A.C. first class rail fare by shortest route or actual amount spent on travel, whichever is less is exempt from tax.
  • If the origin & destination points are not connected by rail or air (partly/fully) but connected by other recognized Public transport system.
  • The first class or deluxe class fare of such transport by shortest route or actual amount spent on travel, whichever is less is exempt from tax.
  • If the place of origin & destination is not connected by rail or air (partly/fully) and not connected by other recognized Public transport system.
  • The AC first class rail fare by shortest route (if the journey was performed by rail) or the amount spent on travel, whichever is less is exempt from tax.

What is Carry Over Concession?

If the assessee is not able to use LTA provided by his employer either once or twice (the permitted limit) in a 4 years block period, then he can still claim LTA exemption by using LTA in the year immediately succeeding the 4 years block period. It is known as carry over concession.

Understand the process to claim LTA

The process to claim LTA is generally employer specific. Every employer provides the due date within which employee must claim LTA and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent, etc. along with the mandatory declaration.

Though it is not necessary on the part of employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records and to submit to employers based on the LTA policy of the company/to tax authorities on demand.

Leave Travel Allowance exemption is available through your employer. The employee just needs to submit proof and the employer will add tax liability to Form 16. This is a good way to save tax while on vacations within the country.

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leave travel allowance in ctc

Leave Travel Allowance (LTA): Eligibility & Rules

Leave Travel Allowance (LTA): Eligibility & Provisions

Leave Travel Allowance (LTA): The Income Tax Act of 1961 offers the salaried class a number of exemptions in addition to deductions for things like LIC premiums and mortgage interest. Deductions are taken out of your total taxable income, whereas exemptions are excluded from your total taxable income. These exemptions give employers the ability to tax-effectively structure the Cost to Company (CTC) of employees.

Leave Travel Allowance (LTA)/Leave Travel Concession (LTC) is one such exemption that the law grants to the salaried class and is frequently utilized by employers. In addition, LTA received from a former employer with regard to travel after retirement or termination of employment is eligible for LTA exemption.

Read Also: 10 Common mistakes to Avoid When Filing GST Returns

What is leave travel allowance (lta).

An employee may receive a Leave Travel Allowance from their employer for travel to any location in India while on leave, after retirement, or after their employment has ended. Even though it might seem straightforward, there are a lot of things to consider before you decide to request an LTA exemption. The following rules for claiming LTA exemption have been established by Income Tax Law.

Who can claim LTA?

Only individuals can claim LTA for travel costs incurred for themselves and their family (Spouse, children, wholly or mainly dependent siblings, parents). The tax exemption of leave travel allowance is not available in case you choose the new tax regime.

Read Also: No ITR refund until you verify the Income Tax Return

Eligibility for claiming lta:.

  • You must actually travel to receive the exemption.
  • Only domestic travel, or travel within India, is taken into account for exemption. No international travel is covered by LTA.
  • The employee is eligible for the travel exemption whether they are traveling alone or with their family, which includes their spouse, kids, parents who are completely or primarily dependent on them, siblings, and other blood relatives.
  • Further, such an exemption is not available for more than two children of an employee born after 1 October 1998. Children born before 1 October 1998 do not have any restrictions. Further, in cases of multiple births on a second occasion after having one child is also not affected by this restriction.

Read Also: Have social media income? All you need know about income tax

Lta exemption.

Only the actual travel expenses, such as the employee’s air, rail, or bus fares, are eligible for the exemption. No expenses like local transportation, sightseeing, hotel stays, meals, etc. qualify for this exemption. Additionally, only LTA provided by the employer is exempt.

For example, if LTA granted by the employer is Rs 40,000, and the actual travel cost incurred by the employee is Rs 15,000, then only Rs 15,000 will be available as an exemption and the balance of Rs 25,000 would be included in taxable salary income.

An LTA exemption is available for only two journeys  performed in a  block of four calendar years .

A block year is different from a financial year and is decided by the Government for LTA exemption purposes. It comprises 4 years each. The very first 4-year block commenced in 1986. The list of block years is 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. The block applicable for the current period is the calendar year 2018-21. The previous block was the calendar year 2014-17.

Read Also: Income tax on inherited income: Is money from inherited income taxable in India?

Carryover of lta.

In case an employee has not availed exemption with respect to one or two journeys in any of the block of 4 years, he is allowed to carryover such exemption to the next block provided he avails this benefit, in the first calendar year of immediately succeeding block.

LTA claiming Procedure

LTA claim procedures are typically employer-specific. Every employer publishes the deadline by which LTA claims must be made by employees, and they may ask them to submit additional documentation, such as tickets, boarding passes, invoices from travel agencies, etc., in addition to the mandatory declaration. Although collecting proof of travel is not a requirement for employers, it is always advisable for employees to keep copies for their records and to submit them to their employers in accordance with the LTA policy of the company or to tax authorities upon request.

LTA Exemption for Vacation on Holidays

Many organisations that go strictly by the wordings of the income tax provision are allowing employees to claim LTA only if the employee applies for leaves and travel during that time. Such organisations may reject LTA claims for travel on official holidays or weekends.

Read Also: ITR Filing: How to report Capital Gain loss in Income Tax

leave travel allowance in ctc

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Home » Earn Online » What is Leave Travel Allowance & How to Claim it

What is Leave Travel Allowance & How to Claim it

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Table of Contents

Have you been planning a family vacation and considering how to avail of Leave Travel Allowance? Not to worry, we are here to tell you all about Leave Travel Allowance. Not only what it is but also how it can be easily claimed. Leave Travel Allowance (LTA) is an allowance that is provided to an employee for personal outstation travel. The allowance can only be used for travelling within India and not outside. It is a great way for you to lower your tax liability. You can claim two journeys in four years. The exemption is only applicable to the employee or their family. Moreover, your salary structure determines the Leave Travel Allowance limit.

What is Leave Travel Allowance?

Definition of lta.

If you ask what Leave Travel Allowance means, let’s answer it in simple terms. Employees are eligible for LTA as part of their cost-to-company (CTC) and can claim reimbursements spent on travel.

Purpose of LTA

It is a way for companies to give you some paid time off with your family. But it also helps you with leave travel allowance income tax exemption. It comes under section 10 (5) of the Income Tax Act. Now, if one asks who is considered family under LTA rules, it includes spouses and children, dependent parents, and dependent siblings.

Types of Expenses Covered Under LTA

The LTA only includes travel expenses and doesn’t include food or stay expenses. Moreover, according to LTA claim rules, it is only for domestic travel Most importantly, it cannot be claimed in every financial year. The LTA exemption for travel is only for the employee or his family. Only expenses for two children are included in the LTA, according to a report.

Criteria to Claim LTA

Leave eligibility.

The Leave Travel Allowance can only be availed if the employee is on leave from work.

Mode of Travel

The Leave Travel Allowance includes travel modes like air and train. You need to choose the tickets wisely. The LTA exemption is mostly for the shortest route to the destination. The following travel modes you can opt for: Travel by Air: You can claim either for the shortest route or the actual expenditure, whichever comes out to be less for tax exemption. Travel by Train: One can opt for First Class AC by the shortest route or the actual amount. Again, whichever comes out to be lower for tax exemption. If the destination is not connected by train or air, this is the amount one can claim. You can get first-class AC or deluxe-class fare for the shortest route.

Destination Criteria

As mentioned above, the destination can be any place within India. International travel cannot be claimed under the LTA rules. You can travel by air, train or any other mode of transport which reaches the destination.

What if it is a multi-destination journey? It can be claimed for the travel from the place of origin to the farthest point for the shortest route.

Claim Timeline

How to calculate leave travel allowance? It can be only claimed in a block of four years. A block year is unlike a financial year. The current block year that is going on is 2022-2025. An employee can claim two LTAs during this period of four years. The right time to opt for an LTA is when you can maximize tax savings. If you couldn’t claim during that block, this is what to do. It can be carried forward to the first year of the subsequent block year. Preferably claim an LTA where you had higher expenses. If one does not claim LTA, the employer adds the leave travel allowance to the salary itself.

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How to Claim LTA

Required documents for lta claim.

If you are wondering how to claim LTA, find below all the details you need. First, make sure to keep all the travel agent’s invoices, travel tickets, and other travel proof. Submit the documents according to the employer’s leave travel allowance bill format. The taxation of LTA in the case of central government employees and the private sector is different. For government employees, LTA is not part of the salary structure of an employee. For private sector employees, it is part of the CTC. It becomes non-taxable in the year the employee submits the bills to the employer.

Procedure to Claim LTA

The procedure to claim Leave Travel Allowance is very employer-specific. They announce the due date within which employees can make the claim. It is not mandatory to collect proof of travel. However, it is always advisable to have copies of the travel proof.

Also Read: 20 Ways to Get Paid to Travel: Online Jobs for You While You Travel

LTA in Brief

Now, you know what is Leave Travel Allowance. It is the paid time off that an employer provides his employees. But that’s not all. Leave Travel Allowance income tax benefits are something that everyone enjoys. However, the LTA rules for tax exemption are very specific. When it comes to modes of travel, you can opt for a mode that takes the shortest route. The destination needs to be within India. The Leave Travel Allowance limit depends on your CTC. An employee can claim the LTA by using the travel proof and submitting it on time. The best time to avail of LTA is when you have high expenses. Also, it will lead to the highest tax exemptions. LTA can be claimed twice in four years which is called a block. The current block is 2022-2025. If you cannot avail in this block then it will get carried forward to the next one. In short, Leave Travel Allowance is a privilege for an employee for all the hard work. So who wouldn’t like to enjoy it?

Want to explore helpful techniques to save and grow your hard-earned money? Dive into our guide on  Save Money .

Frequently Asked Questions (FAQs)

Leave Travel Allowance cannot be claimed every year . According to LTA rules , it can be claimed twice in four years. Also, there are terms and conditions on what sort of travel is allowed. It needs to be domestic travel and LTA only pays for the travel. Food and other expenses are not part of the reimbursement. So, one needs to make sure to avail of LTA when there are high expenses.

LTA can be claimed only twice in a four-year block. The claim is specific to travel expenses incurred by the employee or his family which includes spouse, two children, dependent parents, or dependent siblings.   The travel does not include food or other expenses. The employee can opt for different modes of travel, whichever has the shortest route or is of lower cost. 

The amount received for LTA is tax-free up to a certain amount. It comes under Section 10 (5) of the Income Tax Act. It means you can deduct LTA as an exemption from your income.   So, to make it tax-free there are certain LTA rules that you need to follow. The modes of travel you opt for must be the shortest route. Also, the LTA must be availed when you are on leave. 

The tax exemption limit depends on the amount that the employer has provided. For example, if an employer has been given an LTA of Rs. 30,000 and the actual travel cost came up to be Rs. 25,000. Then, the employee will be exempted from Rs. 25,000 but the rest of Rs. 5000 will be part of the taxable salary income.  In brief, whatever part of LTA is not spent on travel, will eventually be taxed. 

The conditions to avail of tax exemption are the following:   1.  According to leave travel allowance income tax rules, travel must be domestic.  2.  If a person opts for travel or air as a mode of transport, it should be the shortest route. Otherwise, the travel amount spent must be less.  3.  The LTA can opt only for a time when the employee is on leave.  4.  LTA can be used for an employee or his family.  

Under LTA rules, family includes spouses, children, dependent parents, and dependent siblings are included in the travel cost claimed for a tax break.

In the case of the multi-destination journey, LTA can be claimed for the travel from the place of origin to the farthest point for the shortest route.

It’s not mandatory to submit travel cost bills to the employer, it’s advisable to keep copies of travel proof as documentation for claiming LTA.

No, LTA exemption cannot be claimed on every vacation. There are rules and limitations regarding the frequency and eligibility for claiming LTA.

Related Reads

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leave travel allowance in ctc

LTA Full Form with Claiming Process

Lta full form.

LTA full form is Leave Travel Allowance. It is a provision by many employers to their employees, allowing them to travel during leave periods and claim expenses incurred during such travels. LTA is a component of the salary package and is often subject to specific terms and conditions outlined by the employer or the tax authorities. It aims to encourage employees to take vacations and explore different destinations. LTA can be claimed for travel expenses within India and sometimes even for international travel, depending on the employer’s policies and regulations.

Eligibility Criteria to Claim LTA

  • You must be an employee who receives LTA from your employer.
  • The travel must be within India.
  • You can claim the exemption for two journeys in a block of four years. The current block is 2022-2025.
  • You can travel with your family, which includes your spouse, children (up to two children born after October 1, 1998), and dependent parents, brothers, and sisters.

LTA Exemption

  • The exemption amount is based on your travel expenses and your employer’s LTA policy.
  • It generally covers the cost of economy airfare, train fare, or bus fare.
  • It does not cover expenses like food, accommodation, or local travel.

How to Claim LTA?

To claim Leave Travel Allowance (LTA) in India, employees typically need to follow certain steps and provide necessary documentation to their employer. Here’s a guide on how to claim LTA with an example:

  • Step 1: Understand LTA Policy: Familiarize yourself with your employer’s LTA policy, including eligibility criteria, frequency of entitlement, eligible family members, travel destinations, and documentation requirements.
  • Step 2: Plan Your Trip: Plan your vacation trip within India and decide on the mode of transportation, travel dates, destinations, and accommodation arrangements for yourself and your eligible family members.
  • Step 3: Keep Records of Travel Expenses: Keep detailed records of all travel expenses incurred during the trip, including transportation costs (airfare, train fare, bus fare, taxi fare), accommodation expenses, and food expenses.
  • Step 4: Collect Supporting Documents: Gather supporting documents such as tickets, boarding passes, hotel bills, restaurant bills, and any other relevant receipts or invoices as proof of travel expenses.
  • Step 5: Submit LTA Claim Form: Obtain the LTA claim form from your employer’s HR department or download it from the company’s employee portal then Fill out the LTA claim form accurately, providing details of your trip, travel expenses, and eligible family members.
  • Step 6: Attach Supporting Documents: Attach copies of supporting documents, including tickets, bills, and receipts, to the LTA claim form as evidence of incurred expenses.
  • Step 7: Submit Claim to HR Department: Submit the completed LTA claim form along with supporting documents to the HR department or designated personnel within your organization.
  • Step 8: Await Processing and Reimbursement: Allow time for the HR department to process your LTA claim. Once processed, you will receive reimbursement for the eligible LTA amount through your salary or as a separate payment, depending on your employer’s policies.

Example: Let’s consider an example:

  • An employee, Ravi, plans a vacation trip to Kerala with his spouse and two children during the summer holidays.
  • Ravi books air tickets, hotel accommodation, and incurs food expenses during the trip.
  • After returning from the trip, Ravi fills out the LTA claim form provided by his employer and attaches copies of tickets, hotel bills, and restaurant receipts as supporting documents.
  • Ravi submits the completed LTA claim form and supporting documents to the HR department for processing.
  • Upon verification, the HR department processes Ravi’s LTA claim and reimburses him for the eligible LTA amount as per the company’s policy.

LTA Calculation Example

Let’s consider an example to illustrate how to calculate Leave Travel Allowance (LTA):

Scenario: An employee, let’s call him Ravi, is planning a vacation trip with his family within India. Ravi’s employer offers an LTA benefit equal to the actual amount spent on travel expenses or a fixed LTA amount specified in his salary package, whichever is lower. Ravi’s LTA entitlement is Rs. 40,000 per year, and he is eligible to claim LTA once every four years.

Travel Details:

  • Mode of Transportation: Air Travel (Economy Class)
  • Travel Route: From Delhi to Goa and back
  • Travel Dates: Departure on 1st July 2024, Return on 7th July 2024
  • Family Members: Ravi, his spouse, and two children

Expense Breakdown:

  • Rs. 12,000 per person x 4 = Rs. 48,000
  • Total Airfare: Rs. 48,000
  • Rs. 5,000 per night x 6 nights = Rs. 30,000
  • Estimated food expenses for 6 days: Rs. 15,000

Total Actual Expenses:

  • Total Accommodation: Rs. 30,000
  • Total Food Expenses: Rs. 15,000
  • Total Actual Expenses: Rs. 48,000 (Airfare) + Rs. 30,000 (Accommodation) + Rs. 15,000 (Food) = Rs. 93,000

Calculation of Eligible LTA Amount:

  • LTA Entitlement: Rs. 40,000 (Maximum allowable LTA as per Ravi’s salary package)
  • Actual Expenses: Rs. 93,000

Since the actual expenses exceed Ravi’s LTA entitlement, the LTA amount eligible for exemption will be limited to his LTA entitlement of Rs. 40,000.

Conclusion: In this example, Ravi’s LTA entitlement is Rs. 40,000 per year, but his actual travel expenses amount to Rs. 93,000. As per his employer’s LTA policy, Ravi can only claim Rs. 40,000 as exempt from taxation, and the remaining Rs. 53,000 will be taxable as per the applicable income tax slab rates.

Frequently Asked Questions

1. what is lta in salary.

LTA stands for Leave Travel Allowance. It’s a component of your salary package provided by some employers to cover travel expenses when you take leave for vacation. LTA can typically be claimed for travel expenses within India, subject to certain conditions and limitations set by the employer and tax regulations.

2. How much is the LTA allowance?

The Leave Travel Allowance (LTA) amount varies based on your employer’s policy. Typically, it covers travel expenses for leave days granted by the employer. The specific amount depends on factors like your company’s policies, your designation, and the distance you plan to travel. Check with your HR department for precise details.

3. What is the rule for LTA claim?

The rule for LTA (Leave Travel Allowance) claim varies depending on your country’s tax laws and your employer’s policies. Generally, it allows employees to claim expenses incurred during travel within the country. Keep receipts and ensure your travel meets the criteria set by your employer and tax authorities.

4. Is LTA mandatory in salary?

No, LTA (Leave Travel Allowance) is not mandatory in salary. It’s an additional benefit provided by some employers to cover travel expenses when an employee takes leave. Whether it’s included depends on the employer’s policies and the terms negotiated in the employment contract.

5. What percentage of CTC is LTA?

LTA (Leave Travel Allowance) typically constitutes about 10-15% of an individual’s Cost to Company (CTC). However, this can vary depending on the employer’s policies and the specific terms negotiated in the employment contract. It’s advisable to consult your company’s HR department for precise information regarding your CTC breakdown.

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  1. All you need to know about Leave Travel Allowance (LTA)

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  2. Leave Travel Allowance (LTA): Eligibility, claim rules, procedure and

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  3. Leave Travel Allowance (LTA): Benefits, Conditions & Exemptions

    leave travel allowance in ctc

  4. All you need to know about Leave Travel Allowance

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  6. Leave Travel Allowance(LTA)

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COMMENTS

  1. Leave Travel Allowance (LTA)

    Leave Travel Allowance is a type of allowance given by an employer to their employee for travelling to any place in India: either on leave, after retirement or after the termination of his service. ... The amount of LTA exemption depends on the LTA component in your compensation package or CTC. You can furnish proof of travel within the block ...

  2. Leave Travel Allowance (LTA)

    By using these exemptions, employers can structure employee Cost to Company (CTC) in a tax-efficient manner. Leave Travel Allowance (LTA) is an exemption available to salaried workers under the law that is also widely used by employers. When planning travel to claim an LTA exemption, many factors need to be considered.

  3. LTA: Meaning & Conditions to claim Exemptions- Learn by Quicko

    Leave Travel Allowance is an allowance employers give to their employees as a part of CTC for travelling alone or with family to any place in India : either on leave or ... an employee does not avail Leave Travel allowance for the block of 2018-2021. He is allowed to carry forward a maximum of one unavailed LTA to be used in the succeeding ...

  4. Leave Travel Allowance (LTA)

    Leave Travel Allowance or LTA is a type of allowance given to the employee by employers for travel. It covers within-country travel costs when he/she is on leave from work. Section 10 (5) of the Income Tax Act, 1961 with Rule 2B ensures the exemption of tax and also details the conditions subject to tax exemption.

  5. How To Calculate The CTC Structure (Formula And FAQs)

    5. Find out leave travel and other allowances Leave travel allowance is the benefit that companies provide their employees for meeting the travel expenses when they are on leave. This allowance is eligible for tax exemption under the Income Tax Act. Employees can show proof of their travel expenses to claim this allowance. Many companies only ...

  6. What is leave travel allowance? How do I use it?

    Salaried employees who get leave travel allowance as a part of their CTC, can claim a tax deduction on the expenses incurred during the travel. The tax deduction can be claimed for travel for self and members of the family (includes spouse, children and parents, brother, sister, if wholly dependent on assessee ) for the journey undertaken ...

  7. Leave Travel Allowance (LTA): Rules, Claim, Eligibility & Exemption

    The LTA (Leave Travel Allowance) exemption applies only to the actual travel expenses incurred by the employee, such as train fare, bus fare or airfare. For example, let's say the employer provides an LTA of Rs 40,000. However, the employee's actual travel expenses amount to Rs 25,000. In this case, only Rs 25,000 will be eligible for ...

  8. leave travel allowance: How to claim LTA from your employer

    Leave Travel Allowance forms a part of an employee's total CTC (cost-to-company).Also known as Leave Travel Concession, an employee can claim an exemption under section 10(5) of the Income Tax Act, 1961, for expenses incurred for travelling when on leave anywhere in the country. Here, the amount you can claim as LTA, i.e., the money spent during the travel when on leave, is equal to the ...

  9. Is Leave Travel Allowance (LTA) worth claiming?

    Leave travel allowance is an allowance which is provided by the employer to the employee who is traveling on leave from work. It is a part of the employee's CTC (cost-to-company). It is exempted in the Income Tax Act, 1961, under section 10 (5). The LTA received by an employee will not be a part of his net income of the year.

  10. All you need to know about Leave Travel Allowance (LTA)

    Frequently mentioned but not always fully understood, LTA or Leave Travel Allowance is often variously interpreted by HR personnel. It's often a grey area and practices may differ from company to company. ... LTA is included in an employee's CTC (cost to company) package, but under the IT rules, it cannot be claimed every year but only ...

  11. Leave Travel Allowance

    Final Word. Leave Travel Allowance is a benefit offered by employers to compensate for travel of the employee and close family when on leave. You can claim an LTA exemption, offered under section 10 (3) of the Income Tax Act, while filing your tax return using the old tax regime. The new tax regime, however, does not have a provision for LTA.

  12. Leave Travel Allowance (LTA): Benefits, How It Is Calculated and

    Leave Travel Allowance is a part of your CTC that the employer provides. It serves as compensation that you receive while travelling on leave. You can claim a deduction on LTA while filing your tax returns. Such a claim can be made twice in a block year. This allowance proves beneficial for employees seeking some relief on their travelling ...

  13. Leave Travel Allowance (LTA)

    These exemptions or saving options allow an employer to structure the Cost to the Company (CTC) of the employees in tax efficient way. One of the largely used exemptions by the employers is Leave Travel Allowance (LTA) or leave Travel Concession (LTC).. The Leave Travel Allowance is the allowance provided by an employer to its employees for traveling.

  14. How to Find Your In-Hand Salary Based on Your CTC

    Leave Travel Allowance-Some employers to provide a leave travel allowance as a part of their CTC. An exemption is allowed for the travel fare subject to conditions as laid down in the act. This year the government has introduced an LTC cash voucher scheme that allows you to claim the benefit of LTA on purchasing goods or services as specified.

  15. LTA

    Such exemptions enable employers to arrange a Cost to Company (CTC) for employees in a tax-efficient manner. One such exemption available in the paid category under the law and which is widely used by employers is Leave Travel Allowance (LTA) / Leave Travel Concession (LTC). LTA exemptions are also available on LTA received on the employer's ...

  16. LTA Rules: How to claim Leave Travel Allowance?

    All the mediums of the travel i.e road, rail or air are claimable under LTA. However, the employee must submit a valid proof of cost to claim the leave travel allowance. LTA can be claimed only on the travel expense. Food or stay or any such expenses excluding travel cannot be a part of it. LTA can only be claimed on domestic travel expenses.

  17. "What is Leave Travel Allowance (LTA)

    Feb 17, 2018. Leave Travel Allowance (LTA) forms a part of an employee's total CTC (cost-to-company). Also known as Leave Travel Concession, an employee can claim exemption under section 10 (5) of the Income Tax Act, 1961, for expenses incurred for travelling when on leave anywhere on the behalf of the organization within the country.

  18. Leave Travel Allowance (LTA): Eligibility & Provisions

    Only the actual travel expenses, such as the employee's air, rail, or bus fares, are eligible for the exemption. No expenses like local transportation, sightseeing, hotel stays, meals, etc. qualify for this exemption. Additionally, only LTA provided by the employer is exempt. For example, if LTA granted by the employer is Rs 40,000, and the ...

  19. Leave Travel Allowance Explained: All You Need to Know

    1. According to leave travel allowance income tax rules, the travel needs to be domestic. 2. If a person opts for travel or air as a mode of transport, it should be the shortest route. Otherwise, the travel amount spent must be less. 3. The LTA can opt only for a time when the employee is on leave.

  20. LTA Full Form

    LTA (Leave Travel Allowance) typically constitutes about 10-15% of an individual's Cost to Company (CTC). However, this can vary depending on the employer's policies and the specific terms negotiated in the employment contract.

  21. Leave Travel Allowance (LTA): Procedure & Eligibility Criteria

    Leave Travel Allowance (LTA full form) is a provision under the Income Tax Act, 1961 that allows salaried employees to claim tax exemption on expenses incurred for domestic travel. This exemption is commonly used by employers to structure the Cost to the Company (CTC) of employees in a tax-efficient manner. The LTA exemption can be claimed on ...

  22. How to Calculate and Use the LTA Allowance?

    To claim Leave Travel Allowance (LTA) in India, you need to follow the steps outlined below: Step 1: Understand the LTA Policy: Familiarize yourself with your employer's LTA policy to understand the eligibility criteria, conditions, and documentation requirements for claiming LTA. The policy will specify the eligible modes of travel, eligible ...

  23. Make Optimum Use Of Your Leave Travel Allowance

    Employees can claim leave travel allowance for any two journeys undertaken in a block of four consecutive years. The current block for LTA exemption is from 2018 to 2022. The previous LTA four year block ran from 2014 to 2017. There is, however, an exception to the rule in case the employee claims only 1 LTA in one block.