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
In a block of four years, if a person has not claimed lta, can LTA of two block can be clubbed and claimed in a single year. Assume one journey is performed. If yes, where in the Income tax act is stated so? and can you support case laws regarding the same?
Narasimhan B
@Narsimhan
Only one travel per calender year can be claimed for LTA exemption and such two travels in a block of four years.
If a person has not claimed any exemption in first four block years of service, he can carry forward one travel to next block. In that he would be able to claim for three travels in next block of four years, but still one travel per calender year condition would remain as it is.
Thanks pankaj. Can you send me any case laws or Court judgemnets.
Regards,
Narasimhan B
Hi Pankaj,
My company gets declaration from employees in April about LTA and others. At that time I declared LTA as 0. Now I want to declare my LTA allowance to Rs. 40000 and then claim it. My finance people say that it is not possible now. I might be losing out money in taxes. Is there any such rule that I can't claim my LTA if I have not declared it during the beginning of financial year?
Ankit
@Ankit
There should not be such rule not to change income tax declaration. They should be avoiding it to decrease their tension and work.
You should request your employer to change declaration by providing a new form.
Can an employee claim LTA tax exemption if its employer does not have the LTA component in the Salary stack/HR Policy? Please advice at the earliest. appreciate!
@Lakshay
No, if employee package structure does not have provision for LTA, exemption for same cannot be taken.
Hi Pankaj,
As discuused, my employer does not have the LTA in the salary stack. However, i want to claim the Tax exemption for the same to minimize the taxable income to the maximum possible extent. Is there an alternative that i can avail the LTA exemption in this particular case? Please advice on the appropriate course of action (if applicable).
Warm Regards,
Lakshay
@Lakshay
There is no alternative, if LTA is not a component in your salary structure.
Thanks Pankaj. Appreciate the time taken out.
Cheers!
Lakshay
Pankaj,
To confirm - if we don't submit the supporting proof's for LTA, company is not liable to deduct taxes (as per supreme court).
E.g. if company declares 50K amount as LTA, we dont need to submit any proof and company won't even deduct the taxes on it (given the fact we provided all the relevant supporting documents for other undertakings).
Please confirm.
Thanks,
Varun Goel
@Varun
LTA has to be still claimed from your employer by filling in employer specific reimbursement form providing details such as date of journey, place of travel, duration etc.
Okay, if I provide them the details of my travel plan, dates, destination etc - do I still need to give them the proofs? I can give them an undertaking about above details.
@Varun
Yes, If you give them signed reimbursement request, they should not be asking for travel proofs as per court guidelines.
Thanks Pankaj, I hope it should help us.
Hi Pankaj,
I wanted to understand the tax exemption figure for the Sodexho Coupons received from the employer. Is there a figure for a financial year?
Please Advise.
Warm regards,
Lakshay
@Lakhshay
Meal passes/vouchers like sodexho are non-taxable upto Rs 50 per meal. So lets say for 22 working days in a month, 1100 Rs would be non-taxable.
Pankaj,
I am working in ISRO. My grade pay is 4600. I want to take LTC to North India from Bangalore. Whether I am eligible for Air fare. What is the maximum amount that I can get?
@Hima
At max, economy airfare on national carrier (AirIndia) would be eligible for tax exemption.
You may check airfare on their website.
Pankaj,
I would like to know if a package tour is covered under LTA?
If so how do the company calculate break up? as the package tour includes Travel / accomodation / meals
Also the travel agent will provide an invoice just for the package and not the breakup
im planning to travel Bangalore-Delhi-Jaipur-Agra-Delhi-Manali-Delhi-Bangalore.
can i take multiple package tours for different locations and still claim complete benefit from LTA
@Prakash
Only travel part would be covered under LTA benefit. Accommodation and meals cannot be covered under same.
Only shortest distance fair would be considered for exemption. Max exemption would be airfare on national carrier (AirIndia) on such shortest route.
As there would be break in between like stay in Jaipur, Agra and Manali. It would be considered only for first break e.g. Bangalore-Delhi-Jaipur and back to Bangalore.
I have traveled in Mar 2011, that point of time i didn't claim. shall i claim this as non taxable? please give me clarification.
@P Rameswara
You can claim travel done in March 2011 now as non-taxable.