in Finance, Income Tax, News |

No need to submit LTA proofs to employer

From now on, Employee will not have to submit proofs as evidence, to their employers for getting LTA (leave travel allowance) reimbursement.

Supreme court of India gave ruling that employers, while reimbursing LTA claims of their employees, are under no statutory obligation to collect  evidence and provide them to tax authorities.

As per Income tax rules of India, if transport bills for LTA are not provided, the amount will be taxed. E.g. If an employee has LTA allowance as Rs 50,000 in his CTC(cost to company), and he provides proofs of Rs 40,000 (boarding pass, air tickets, taxi vouchers) then income tax will be deducted for rest of the Rs 10,000. Does not matter whats the amount of LTA in an employee’s package, income tax laws only permits domestic air tickets only for LTA claim.

This court order came after a hearing of case between Larsen & Toubro and income tax department of India. Income tax department had argued that employer has to collect proofs from employee for LTA. Rejecting this, the supreme court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”

Here is the link to court appeal

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565 Comments

  1. Just wanted to say HI. I found your blog a few days ago on Technorati and have been reading it over the past few days.

  2. Pankaj,
    We need not submit the proofs to employer or we need not submit to income tax itself.
    They have no right to deduct tax if we dont submit any proof ??

  3. Subhash,
    Employee can’t ask us for proofs while clearing LTA claim and so can’t deduct tax on claimed amount. But income tax authority can ask individual for a proof in case of scrutiny.

  4. Hi Pankaj,

    Is this relflect for 2008-09 year or next year??
    Since we already submitted proofs to my company. Is there any official website where we can get more information ?

    Regards,
    Srinivas

  5. Hi Pankaj,

    Thanks for sharing this information, do you have the printed order from the supreme court ruling to withdraw supportings from the LTA thing,,, employers want to see those before HR implements it please. Send that to [email protected]

    Thanks

  7. Hi,
    I have a question I have opted for LTA and my company says to provide the bills by 15 of any month but I am travelling on 17 March.I have to avail this LTA in this financial year only.Can I submit my bills at the time of filing return in July?How will I get the reimbursement of this LTA which I have already declared.Is it necessary to provide bills to Employer only in order to get exemption of Tax.
    Please help.
    Thanks in advance
    Aparna Pandey

  8. Aparna,
    You should provide LTA bills to your employer before 31st march and they should do your tax calculations accordingly and deduct tax in march salary.
    Employer can reimburse LTA taking it as taxable first and then they can adjust tax in march salary when you submit your reimbursement documents.

    While filling return you can not submit anything with return form. So you will have to do it before 31st march.

  9. Dear Mr Pankaj

    This is ref to the article below which was published in ref to the Supreme court ruling on the LTA by DECCAN HERALD ON 2.2.09.

    No need for proof to claim LTA: SC

    DH News Service, New Delhi:

    The Supreme Court has held that the Income Tax authorities cannot ask the government organisations and private companies to furnish proof in support of tax exemption availed by their staff on leave and travel allowance (LTA) and monthly conveyance allowance.“There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 of the Income Tax Act to collect and examine the supporting evidence to the declaration to be submitted by an employee(s),’’ said a bench of Justices Altamas Kabir and S H Kapadia.While clarifying the ruling, the bench said the beneficiary in the case is an individual employee under the section 10 (5) and the employer is not bound to submit it to the IT department.
    The apex court dismissed an appeal filed by the Commissioner of Income Tax that had asked Larsen and Toubro Ltd and ITI to furnish the details of the travel expenses incurred by the employees to avail LTA.According to the IT Act, if claims on LTA and conveyance are not supported by journey bills, they will be taxed. But if bills such as air tickets, rail tickets, taxi vouchers, hotel bills and other expenses on food and entertainment are submitted, there will be no tax cut.On an LTA allowance of Rs 1 lakh, if documentary proof of bills are submitted only for Rs 50,000, then tax is applicable on the rest of the amount.The IT Department had argued that the companies and organisations are bound to collect the documentary proof to show that the employees had actually utilised the amount meant for LTA and conveyance allowance.The companies had defended their act by saying that tax exemption is given on the basis of the documents submitted on their travel by the employees and tax is deducted if travel proof is not submitted.

    Again with ref to this particular article below they have published that the taxi vouchers , hotel bills, and expenses on food and entertainment can be submitted for deduction for tax.

    According to the IT Act, if claims on LTA and conveyance are not supported by journey bills, they will be taxed. But if bills such as air tickets, rail tickets, taxi vouchers, hotel bills and other expenses on food and entertainment are submitted, there will be no tax cut.

    Could you please let me know whether this was an error.
    I have already pointed out to them in the mail but there is no response from them.

  10. Just wanted to know. If I dont submit the bills for availing the LTA will my employer deduct the tax on the entire amount.

    • If you don’t submit the bills but claim the LTA by submitting reimbursement forms, they can not deduct Tax. But if you don’t claim LTA then they can deduct tax.

  11. I’ve submitted PF transfer form to my current employer 6 months before, But it seems that my previous employer is not clearning the amount. Can my previous employer anyhow control that amout, which it has already subitted to PF dept.

    • Amit,
      For EPF transfer, the previous employer cannot stop the amount being transferred to another employer. In case he is, you can file submit a written request as RTI to your current regional PF commissioner (RPC) asking for status of your PF transfer.

  12. Hello Pankaj,

    As per my salary structure, I am eligible for an annual leave allowance. In my self declaration to the finance team of my company, I had indicated that I would be availing the entire amount available under LTA, for my personal travel . Now, if I fail to provide the boarding pass & flight tickets, would the entire amount eligible under LTA taxed at 30% flat? Please advice.

    • @Hardik,
      Please fill your company’s travel reimbursement form and submit without the proofs. They should not deduct tax then.

  14. Hi,
    Just wanted to check what are the proofs i can submit while filing my returns to reduce my tax liability and claiming a refund
    Is it that all the docs should have been submitted to my employer?

    • @Lavanya,
      You cannot submit any proof or any other attachment with your income tax return. Whatever you fill and declare in your return will be considered as it is.

  15. Hi Pankaj,

    As per your rpely to Lavanya’s query we cannot submit any income tax proofs while filing for return; then how would be claim the refund?
    I was unable to submit my IT proofs to the company by 31st march 2009, because of which my savings (Policies, Tax saver funds, NSCs, HRA receipts etc.) were not taken into account and tax was deducted for the month of march. Does this mean that I wouldn’t be able to get any refund? If no, then how would I claim w/o submitting proofs?

    • @Himani,
      We cannot submit any tax proofs along with return but we can declare them in return form. Whatever you declare in ITR form, will be considered true and tax computation will be done on that. You can show all investment for tax saving and claim refund for that.
      In case they need proof, they can ask you later by sending a query to your address.

  16. Hi, Thanks for the update, also is there a limit for the income exemption i can claim under sect 10?
    I have made two trips one in May 2008 and the other in Jan 2009 and would like to claim the both under LTA.
    I have not claimed LTA prior to this. My taxi bills are working upto nearly 20K , can i claim the deduction under sec 10.

    • @Lavanya,
      In a financial year, you cannot claim LTA twice. As both of your trips were in financial year 2008-09, you have to choose one.

  17. Hi,
    I have shifted my job in Jan 2008. This year I have travelled and i an eligible for LTA claim from my current employer. However can I claim LTA amount from my previous employer after tax ? Form 16 provided by my previous employer does not have any LTA component.

    • @Shiv,
      No, LTA has to be claimed only from same employer during employment period. It can not be claimed after you left the company.

  18. Hi, my company’s system allows me to specify flexible amounts under various heads including LTA. If I increase my monthly LTA deduction above default value (Monthly Basic/12), it still shows the total amount as non-taxable. With reference to that, how much is the upper limit one can claim as LTA. Is it one monthly basic or a different amount ?

  19. Hi Pankaj,

    I am going to a remote location in ladhak. For that i have to take flight from delhi to leh & after couple of days of stay in leh I will hire taxi to go this remote place & stay there for one night. Cost of taxi will also be significant. Can I claim both air & taxi fair for Tax exemption in LTA. If yes it will be great if you can provide couple of links to govt sites (only to convince finance dept. people here.

    Regards,
    Hemant Batra

  20. hi
    I plan to travel from 24 the dec 2009 and return on 3rd jan 2010. Will i be eligible for LTA claim for 2206 -2009 block.

    I appriciate your response. thx

    • @Vinod
      There is no clear information available whether travel should have been completed in the block year or only start date should be in between.
      I suggest you to claim this in 2006-09 block itself.

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