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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Dear Pankaj,
I am going to Sikkim. I would be travelling from Mumbai to Kolkata by rail & Kolkata to Bagdogra by air. My accountant says I can't claim for Break journey & so I am entitled for only Rail charges between Mumbai & Kolkata. Is there any such rule ? His words are produced here "Hi Bindu, We can not consider Break Journey. This is as per IT Rules. All we can Consider is Mumbai to Kolkata & Back (Rs.11224)"
Please suggest.
Regards
Bindumadhav
@Bindumadhav
If there is a break in between (i.e. there is a gap of days between kolkata arrival and departure for bagdogra) then there can be an issue. Otherwise there should not be an issue.
I claimed my last LTA for a trip in March 2008. Can I claim it again for trip in Oct. 09?
@Hemant
Yes you can claim for a different trip again in Oct 09. But make sure that you have not already claimed LTA 2 times in between 2006 and 2009.
LTA claim is allowed only twice in a block of 4 years (current block is Jan 2006 to Dec 2009)
One of the rule says "LTC Rules is allowed journey to “Any place in India” once in a block of four years."
Hi Pankaj,
As far as I know one can claim LTA twice in a block of 4 years. Suppose somebody has got tax benefit using LTA for the year of 2008-2009 by submitting the bills of the travel he made during October 2008 in the month of March 2009; if in October 2009 again he makes a trip when should he submit the bills such that it can give him the tax benefit for the financial year of 2009-2010 (the claim made in March 2009 was the first claim for the block of Jan2006-Dec2009).
Precisely since at Dec2009 the current block is ending when should he submit the bills? Please let me know.
@Subhasis
Please submit reimbursement for LTA before 31st Dec to avail non-taxable allowance.
If an employee claim taxi fare instead of air / train then he eligible for exemption ? On this what is the income tax rule?
@Ketan
Yes, taxi fare can be use for tax exemption
Leave travel allowance is exempt from income tax within certain limits as under : -
(a) Where journey is performed by rail; railway-fare in Second AC class by shortest route to destination.
(b) Where places of origin and destination are connected by rail but the journey is performed by any other mode then Second AC class fare by shortest route to the place of destination.
(c) 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, Second AC class fare for the distance of the journey by the shortest route, as if the journey has been performed by rail.
Hi, Could someone clarify this. If LTC has been paid to a person against proof of travel and then the person leaves the Organization. Can the paid LTA or LTC be withdrawn on pro-rata basis? Thanks
@S Kalaga
Generally LTA is a part of employee's CTC in private organizations and its a yearly component. If an employee leaves before completing the year, company may take back the amount given in advance in lieu of provided bills.
Thank you so much, Mr Batra.
In this case, will the company return the original bills to the employee so that he could claim it with the new employer?
@Karan
Yes, you can ask them for original bills as they need not to keep the bills for LTA.
Sir.
Is there any provision that the encashmnt of LTC for 10 days for central govt.emp, is exempt for the clculation of IT
@Rajan
Yes, central govt employees can avail LTC and that is non-taxable.
Can we travel twice in one year to claim LTA in one year it self. and that such travel be considered as on LTA of one year. Is it so
@Shaikh
No, Maximum one travel can be considered for LTA in a calender year.
My organisation does not give LTA as a seperate allowance but gives a consolidated amount consisting of various perks under head of "Special allowance".
Is it possible for me to claim LTA exemption despite company not giving LTA under a seperate head ?
@Sandeep
If your package has LTA component only then you can avail it as its solely employer decision to make it non-taxable.
if there is a journey break of more than 24 hours then you cannot claim.