Leave Travel Allowance (LTA): Everything You Need to Know

Table of Contents

Introduction

Leave Travel Allowance (LTA) is an important component of an employee’s salary package in India. It is a tax-exempt allowance provided by employers to cover the travel expenses of employees and their families while they are on leave. The Indian Income Tax Act allows employees to claim tax benefits on LTA under certain conditions.

In this article, we will discuss what LTA is, its benefits, eligibility criteria, how to claim it, tax exemption rules, and other essential details. If you are an employee looking to make the most of your LTA benefits, understanding these aspects is crucial.

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) is a type of allowance offered by employers to cover an employee’s travel expenses when they take leave for a vacation. This benefit is part of the salary structure and helps employees reduce their taxable income.

Employees can claim LTA for travel expenses incurred while traveling within India. However, there are certain conditions and rules for tax exemption, which we will discuss further in this article.

Eligibility Criteria for Claiming LTA

To claim Leave Travel Allowance (LTA) benefits, an employee must meet the following eligibility criteria:

✔ The employee must be on leave – LTA can only be claimed when an employee takes leave from work and travels.

✔ Travel must be within India – International travel expenses are not eligible for LTA tax exemption.

✔ The employee must travel with family – LTA covers expenses for the employee, their spouse, children, and dependent parents or siblings.

✔ LTA can be claimed only twice in a block of four years – The Income Tax Department allows LTA exemption for two journeys within a four-year block.

✔ Travel expenses must be supported by proof – Employees must provide valid travel tickets, invoices, or receipts as proof of travel.

✔ Only actual travel expenses are covered – Other expenses like accommodation, food, and sightseeing are not included in LTA benefits.

How to Claim LTA?

To claim Leave Travel Allowance, employees must follow a proper procedure. Below are the steps to claim LTA:

1. Plan Your Travel

Employees should ensure their travel meets the eligibility criteria (domestic travel, family members included, and actual travel expenses).

2. Keep Travel Proofs & Documents

✔ Flight, train, or bus tickets
✔ Hotel invoices (if required by the employer)
✔ Any other travel-related documents

3. Submit LTA Claim to Employer

Most companies have a dedicated process for LTA claims. Employees need to fill out the LTA claim form and submit it along with supporting travel documents.

4. Get LTA Reimbursed

Once the employer verifies the submitted documents, the LTA amount is reimbursed to the employee’s salary.

5. Claim Tax Exemption while Filing ITR

LTA tax exemption is not automatically applied. Employees must mention LTA details in their Income Tax Return (ITR) to get the tax benefit.

LTA Exemption Under the Income Tax Act

Section 10(5) of the Income Tax Act

According to Section 10(5) of the Income Tax Act, 1961, an employee can claim LTA tax exemption for travel expenses incurred during official leave.

Conditions for LTA Tax Exemption

1️⃣ Only domestic travel is allowed – Employees must travel within India. Foreign trips are not covered.

2️⃣ Only actual travel expenses are exempt – Costs like hotel stays, food, or local transportation are not included.

3️⃣ LTA exemption is allowed for two journeys in a four-year block – Employees can claim LTA tax exemption twice in four years.

4️⃣ The exemption applies only to specific modes of transport:

Air Travel – Economy class airfare for the shortest route is considered.
Train Travel – AC first class train fare for the shortest route is considered.
Road Travel – If there is no air or rail service, the fare of an AC deluxe bus or equivalent is allowed.

LTA Block Year System

LTA claims follow a block year system defined by the Income Tax Department.

Block Year	LTA Exemption Period
2018-2021	Two journeys allowed
2022-2025	Two journeys allowed

If an employee does not claim LTA in a block period, one journey can be carried forward to the next block year.

For example, if an employee did not claim LTA in 2018-2021, they can carry forward one journey and claim it in 2022-2025.

What Expenses Are Covered Under LTA?

Covered Under LTA	Not Covered Under LTA
Airfare (Economy class)	Hotel bills
Train tickets (AC First Class)	Food expenses
Bus tickets (AC deluxe bus)	Sightseeing & local travel
Taxi fare (only for locations without air/train connectivity)	Shopping expenses

Only actual travel expenses are eligible for tax exemption under LTA.

LTA Calculation Example

Let’s understand how LTA works with an example:

Scenario:

Mr. Raj earns ₹12,00,000 per year and his company provides an LTA of ₹50,000 per year.
He travels with his family from Delhi to Kerala and spends:
- Airfare: ₹40,000
- Hotel: ₹30,000
- Food: ₹15,000
He submits only the airfare as part of his LTA claim.

LTA Exemption Calculation:

₹40,000 (Airfare) is eligible for exemption
Hotel and food expenses are not covered
If Raj’s tax liability is 30%, he saves ₹12,000 in tax (30% of ₹40,000)

Thus, using LTA correctly can reduce tax liability significantly.

LTA for Government and Private Employees

Both government and private employees can claim LTA. However, government employees often get more flexible LTA benefits.

Government Employees: Fully covered for approved travel, sometimes including family members.
Private Sector Employees: LTA is part of their CTC (Cost to Company), and they must follow company policies for claiming it.

LTA Under the New Tax Regime (2020 Onwards)

The new tax regime (introduced in Budget 2020) does not allow LTA exemption. Employees opting for the new tax regime cannot claim LTA tax benefits.

Tax Regime	LTA Exemption
Old Tax Regime	✅ Allowed
New Tax Regime	❌ Not Allowed

Employees must decide whether they want to stick to the old tax regime and benefit from LTA exemptions or switch to the new regime with lower tax rates.

Conclusion

Leave Travel Allowance (LTA) is a valuable benefit for employees, allowing them to save tax while enjoying travel with their families. However, to claim LTA tax exemption, employees must follow the correct process and meet the eligibility criteria.

By properly utilizing LTA, employees can reduce their taxable income and enjoy financial savings while taking a vacation.

Frequently Asked Questions (FAQs)

1. What is LTA?

LTA (Leave Travel Allowance) is a tax-exempt benefit provided by employers to cover an employee’s travel expenses.

2. How many times can LTA be claimed?

LTA can be claimed twice in a block of four years.

3. Can I claim LTA for foreign travel?

No, only domestic travel is eligible for LTA benefits.

4. Is hotel stay covered under LTA?

No, only travel costs (airfare, train, or bus tickets) are covered.

5. Can I claim LTA without taking leave?

No, LTA can be claimed only when an employee is on leave and traveling.

Disclaimer

This article is for informational purposes only. The rules related to LTA tax exemptions may change based on government policies. Always consult a tax expert or HR department for accurate details.

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