How you can use LTA to go on a tax-free vacation
ET CONTRIBUTORS|
Nov 06, 2017, 06.30 AM IST
Who is eligible to claim LTA?
Only individuals whose employers offer leave travel allowance (LTA) can claim it. You would also have to take leave and actually travel to be able to claim the exemption.
The exemption must be claimed by submitting proof of your travel to your employer, you cannot claim it directly in your income tax return.
What is covered under LTA?
LTA covers journeys made by any mode–air, rail or road. You can claim up to economy fare to the destination for national carriers (in case of air travel) and AC first class rail fare (for rail travel).
How does the tax exemption work?
Some employers may offer LTA as a reimbursement. In such cases the tax exemption is available only on the permissible fare amount. While the entire amount is reimbursed, the payment made to you in excess of the exemption allowed, is taxed like salary. Where LTA is fixed as an allowance, the exemption is allowed based on the permissible fare, while the rest is taxed like salary.
Say your LTA is Rs 50,000, and your actual fare expenses are Rs 38,000 for four members of your family, but the economy fare is Rs 20,000, the balance Rs 30,000 will be taxed as salary.
Can I claim LTA for several destinations or stops on a trip?
The claim must be made for the fare of the shortest distance to the destination, even though you may have made detours and stops in between. Where the destination is not covered by rail or air, first class fare of public transport such as a bus may be claimed. The tax benefit applies only to travel fare, not for connecting taxis or hotel expenses.
How many people can travel under LTA coverage?
You are allowed to claim exemption for yourself, your spouse, two children, dependant parents and dependant siblings.
How many times can I claim LTA?
It can be claimed for maximum two trips in a block of four years. These blocks are not determined by your employment date, the government fixes them. The current block of 2014-2017 expires on December 31, 2017.
Can I claim LTA for a foreign vacation?
No, you can’t. As of now, LTA can only be claimed for trips made within India.
Only individuals whose employers offer leave travel allowance (LTA) can claim it. You would also have to take leave and actually travel to be able to claim the exemption.
The exemption must be claimed by submitting proof of your travel to your employer, you cannot claim it directly in your income tax return.
What is covered under LTA?
LTA covers journeys made by any mode–air, rail or road. You can claim up to economy fare to the destination for national carriers (in case of air travel) and AC first class rail fare (for rail travel).
How does the tax exemption work?
Some employers may offer LTA as a reimbursement. In such cases the tax exemption is available only on the permissible fare amount. While the entire amount is reimbursed, the payment made to you in excess of the exemption allowed, is taxed like salary. Where LTA is fixed as an allowance, the exemption is allowed based on the permissible fare, while the rest is taxed like salary.
Say your LTA is Rs 50,000, and your actual fare expenses are Rs 38,000 for four members of your family, but the economy fare is Rs 20,000, the balance Rs 30,000 will be taxed as salary.
Can I claim LTA for several destinations or stops on a trip?
The claim must be made for the fare of the shortest distance to the destination, even though you may have made detours and stops in between. Where the destination is not covered by rail or air, first class fare of public transport such as a bus may be claimed. The tax benefit applies only to travel fare, not for connecting taxis or hotel expenses.
How many people can travel under LTA coverage?
You are allowed to claim exemption for yourself, your spouse, two children, dependant parents and dependant siblings.
How many times can I claim LTA?
It can be claimed for maximum two trips in a block of four years. These blocks are not determined by your employment date, the government fixes them. The current block of 2014-2017 expires on December 31, 2017.
Can I claim LTA for a foreign vacation?
No, you can’t. As of now, LTA can only be claimed for trips made within India.
