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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Hi Pankaj,
I have a query regarding LTA reimbursement. I traveled from Delhi to Pune and Pune to Delhi. I have to and fro ticket print out and Boarding Pass of while returning from Pune to Delhi. Somehow I lost the boarding pass of traveling from Delhi to Pune.
Is there any way if I can claim LTA ?
@Rahul
You should be able to claim LTA.
Just provide your employer reimbursement forms with one pass copy and convince them about other pass being lost.
my employer insisted for proof as they said that they can't go by supreme court ruling for this fiscal yr however they are waiting for govt's approval.
I wrote to airline and they issued a travel certificate with all details. That's how I managed to claim LTA.
Hello Pankaj,
Can we get Tax exemption on LTA by providing proofs of it while filing income tax return? In my case, my company already deducted Tax on LTA because I didn't acknowledge them before going on LTA vacation.
Thanks in advance.
@Prashant
LTA deduction is not available while ITR filing. ITR form does not have any option to specify same.
It should be claimed with employer only.
Hi Pankaj,
Me and my friend travelled in his own car. Can we submit fuel bills to claim LTA?
@Vijay
Fuel bills cannot be shown as travel proofs.
Hi Pankaj,
I have joined this company on January 2011 and claimed LTA for 2011 and 2012 last month so my one block of LTA is over. I need to check another block as per IT law in current phase.
I also claimed total amount as per my CTC by providing taxi fare. Kindly let me know is this good enough.
I also request if you have good LTA policy available with you as working as HR with one of the private organisation & revamping our policies right now. I need to have as much information as possible.
Waiting for your response.
Thanks
Ajay
@Ajay
Providing taxi fare bills is fine, but total non-taxable amount would only be fare on public transport on such route (economy airfare, first class train or other public transport).
LTA policy is similar in most of the organizations as income tax act has rules already defined.
Dear Pankaj,
Appreciate your prompt response.
If we go by public transport then the total amount of LTA can not be achieved even not for me but all the employees of the organisation as well so need to take your views.
What are the defined set of holidays as per income tax law?
Thanks
Ajay
@Ajay
LTA exemption is allowed for travel with family/dependents inside India on public transport. As per income tax act rules, Following amount would be non-taxable:
1. Where journey is performed by rail; railway-fare in first AC class by shortest route to destination.
2. Where places of origin and destination are connected by rail but the journey is performed by any other mode then first AC class fare by shortest route to the place of destination.
3. Where place of origin of journey and destination, or part thereof, are not connected by rail and journey is performed by any other transport; then (i) If a recognised public transport system exists between such places the first class or deluxe class fare of such transport by shortest route, or, (ii) If in other case, first AC class fare for the distance of the journey by the shortest route, as if the journey has been performed by rail.
As such there is no restrictions on number of holidays one should take, but employer may put 2-3 days leaves mandatory for claim.
Hi Pankaj,
In may of above replies and other web searches, i have seen that minimum no. of days earned leave is required and I have seen different figure in different sites.
Can you just tell me if CBDT have defined any directives on no. of days of earned leave. Actually last year I have taken 2 days leave but as per my company leave policy I need min. 3 days of leave to claim LTA tax exemption.
Thanks in Advance.
@Vijay
As such there is no such condition in income tax rules, its the employer that may put such restrictions for claims.
Thnx Pankaj,
LTA is part of my CTC and at year end we get it after tax deduction. Till last year we are getting it as part of salary instead of as a re- reimbursement. So If I am claiming LTA in my revised Return, I'll not be defaulting based on company policy of min. 3 day earned leave.
One more doubt is I am single and I have traveled alone (from Mumbai to Native place as there is no direct flight available from my work city), still can I claim for LTA.
Thanks,
Vijay
@Vijay
You can claim for travel done alone to your native city, There is no issue in it. If there is no direct flight, first class AC train fare would be exempted between such route.
Hi Pankaj,
But as co. policy says min. 3 day leave is required, I have taken two days only. So if I am claiming LTA for tax benefit, if I am defaulting on IT rules OR I can claim the same?
Basically I am worrying that if I claim LTA and at later stage I need to pay tax with penalty, just because my co. policy says for min. 3 day leave.
@Vijay
LTA exemption should be taken only with employer. If your claim does not fit into their requirements, it would be rejected and no tax benefit may be provided.
If you are asking about claiming exemption at the time of return filing, there is no column in ITR to claim for LTA exemption. If you do it by reducing taxable income, there would be difference in what has been stated by employer in Form-16 and what you declared. In that case IT office may send you notice and then you would have to prove why exemption was not taken with employer.
Hello pankaj
Hope you resolve my doubt also.
I traveled from LUCKNOW-PATNITOP by taxi via DELHI & KATRA & return.
Can I be allowed for the tax exemption for taxi fare.
Or train up to what amount?
@Vijay
You can deposit taxi fare receipts to your employer, but maximum tax exemption would only be available for first class AC train fare only (Lucknow to Jammu) and public bus fare from Jammu to Patnitop. First class AC on way fare would be around Rs 2000 for such route for one person.