Leave Travel Allowance (LTA) is an allowance/benefit that your employer gives you to cover your travel expenses. This is a tax saving instrument as well. Your employer gives you money to go on vacation and the money is not taxable! So far so good…
But there are stipulations/rules from the government as in any other benefit.
Let’s get a look into LTA in this post…
What do I do to claim LTA?
Nothing more than getting a break from the work! Isn’t that great?
· You should take a leave from work and travel to anywhere in India. International travels are not covered.
· Travel alone or take the family along with you. However, you need to be on the list of travelers to get the claim. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.
For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).
What is covered?
Only the travel costs are covered. All the eating, lodging and partying expenses are yours.
So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.
What if you want to travel by a car? If a car is owned by a central government organization like ITDC, the state government or the local body, LTA is permitted.
If you could not get public transport and resorted to private transport, try and get a bill. If the bill is not accepted by your employer, you can always file an income tax return, claim an exemption and get a refund.
You must take the shortest route though. The LTA is covered for the shortest route only.
Can I claim LTA every year?
No. You can only do that twice in the block of 4 years. This block is not calculated with the start of your employment. The government defines these blocks. The currently running block is 2006-09 -- January 2006 to December 2009.
You can only claim LTA once in a year. This means, you are entitled to go on leave any number of times but it will be tax free only once in a year. If you are married, you can ask your spouse to claim the other journey.
But I can’t travel. My job doesn’t allow me to.
Then you can carry it forward.
One LTA can be brought forward and claimed in the first year of next block.
Let's say you do not take your LTA in 2002-05. You will be able to take one LTA in 2006. This means that, in the 2006-09 block, you will be totally entitled to the three journeys.
I switched my job. What happens to my LTA?
You can still claim your LTA. Let’s say, you claimed one of your LTAs in 2006. 2007 you switched jobs. You can now claim the remaining LTA from the present employer. The only thing you need to show the current employer is the previous tax returns.
What if I don’t claim?
If your LTA is not utilized, it gets added to your salary and you will be taxed on it.
Let's say you and your spouse are both employed and both have LTA as part of the salary package. Your LTA is Rs 20,000 and hers is Rs 20,000 too.
Both of you and your child go for a holiday. The tickets for the three of you amount to Rs 15,000. You supply the tickets to your office and this amount will be eligible for a tax deduction; the balance Rs 5,000 will be taxed. You can claim exemption only to the tune of your expenditure.
If you claim this, your spouse will not be able to claim this same holiday from her employer. His/ Her Rs 20,000 will be taxed. Unless, of course, you go for another holiday and he/ she claims it.
Or, let's say, you spend Rs 30,000 on tickets but your LTA is just Rs 20,000. You can claim up to Rs 20,000 and tell your spouse to claim his/ her ticket from his/ her employer.
