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
This is a factual account. Every date and quote below is from written correspondence I…
Every year around July–August, the same ritual: open the Income Tax Department's offline ITR utility…
In my previous update on cross-border investing, I broke down how I secured a zero…
In my last finance update, I documented the exact timeline of executing my very first…
Introduction: Most bank customers accept a credit card rejection as "final." But what happens when…
After spending quite a few days researching platforms and figuring out the best way to…
View Comments
hi pankaj,
pl let me know abt the driver salary...is it non taxable...and if yes till wot limit.....
thanks
ruchi
@Ruchi
If your salary structure has component for same, you can claim for same by showing driver salary receipts with your employer.
Max non taxable amount per month is Rs 900.
i have took lot of leave ( example more than 30 days continously)
can i claim LTA
@Murthy
If your package structure has LTA component, you have actual traveled in India for a trip and you have not already claimed for LTA twice after Jan 2010, then you can claim for LTA exemption by submitting claim forms to your employer.
Please let me know if i can claim the LTA without submitting the Boarding pass of flights which i boarded last year.
@Payal
Officially there is no need to submit proofs to employer, but income tax department may ask for proofs when needed. In case you don't have proofs, its not advisable to claim same.
Pankaj, is there a rule which says that the leave taken should be more than 2 or 3 days to avail the benefit?
I travelled Bangalore to Delhi over a weekend and took just one extra day off on a Monday. Am I not eligible to claim this travel?
@Saurav
Most of the companies have minimum 2 days earned leave policy to claim LTA.
Please confirm same from your employer.
ok then tell me one thing , if my employer is not going to collect any proofs for LTA now in this case when he is going to deduct TDS on salary, on that time without submitting any proofs for LTA i can claim for exemption or not, or without collecting any proofs employer can provide exemption for LTA or not? if yes then is there any issues from the government side, i mean IT department. so without submitting any proofs how could i claimed for LTA?
@Amit Jha
Please see this court ruling: http://courtnic.nic.in/supremecourt/temp/ac%2099305p.txt
You still need to submit claim reimbursement forms with your employer with details like place traveled, dates and fare on bus/train/airline.
Income tax department may ask for actual proofs later, if they have doubt.
Hi Pankaj,
I have the following question w.r.t. LTA TAX exemption.
I made a travel in Dec'2010 and did not claim LTA and hence not submitted the travel detail for 2010-11. This year I claimed LTA (for both years: 2010 & 2011) and sumbitted the travel details/leave card details of last years travel for tax exemption. However my employer rejected saying I cannot submit the travel details/leave card details of last years to this years and said that I should have submitted the same before Mar 31st of 2011. I am confused!! Clarify me if one can ACCUMLATE THE LTA and also the travel details and claim the LTA and TAX exemption on the claimed LTA amount. Also, What does claim for 2 times in a period of 4 years. mean for a common man for both LTA claim and on LTA TaxExemption?
Thanks for your time in advance.
-DK
@Dk
Your employer is right in rejecting your claims for travel done in year 2010. Travel done in a calender year should be claimed with employer before end of financial year. This can't be accumulated for future claim.
As per income tax LTA rules, one can claim leave travel allowance as non taxable only twice in block of four years. Current block is Jan 2010-Dec 2013.
So if your package structure has LTA component, your employer can only make it non taxable two times in these four years and remaining two times, employer will pay only after deducting taxes.
Hi Pankaj,
Thank you so much for clarifying my doubt.
Actually last month i have travelled to my home town as my 2 CLs are getting elapsed, but that is during weekdays. In this regarding can i claim for LTA for those 2 days ?
Is it mandatory that i should have taken 4 days paid leaves ?
CLs will not be used for LTA ?
Regards,
Rekha
@Rekha
It would depend on your company's policy.
Most companies do not allow LTA claim on casual leaves. They make it compulsory to take minimum two earned leave in order to claim travel allowance.
Thank you for providing your valuable answer.
Hello Pankaj,
I have a query for LTA. I want to claim LTa for this financial year. I have travelled to Chandigarh this year in the month of May'11 and now in Feb'12 I will be travelling to Jammu. Can I claim for the travels of the same financial year for LTA.
@Girish
Ideally, as per income tax LTA rules, you should be able to claim both travels as non taxable as they fall in different calender years. But most of the employers align LTA to financial year and allow one claim per FY.
So, you would need to confirm same from your employer.
Thank you Pankaj for the perfect answer ...
Hi,
I use my company car. My questions is: Can I claim LTA against one of my recent trips to my native place while on vacation using this company vehicle? I have the toll receipts issued enroute as well as the petrol bills.
Sanjay
@Sanjay
Petrol bills and toll receipts won't be accepted for LTA claim. It has to be either train/bus/airline tickets or payment receipt to a travel operator.
Hi Pankaj,
I am planning to go to Jamshedpur this April for a week. I am travlling from Bangalore - Kolkata by flight and from Kolkota to Jamshedpur by taxi.
I will take the same route while travelling back to bangalore
So my itenary would be
Onward journey
Bangalore - kolkota (by air)
kolkata - jamshedpur (by taxi)
Return Journey
jamshedpur - kolkata (by taxi)
kolkota - Bangalore (by air)
My parents are currently in Chennai. and they are planning to come to kolkata by train during the same time and join me at kolkota for the onward journey to Jamshedpur.
So their itenary would be
Onward journey
Chennai - kolkota (by train)
kolkata - jamshedpur (by taxi)
Return Journey
jamshedpur - kolkata (by taxi)
kolkota - Chennai (by train)
1) can i claim LTA for both myself and my parents (they are dependent)
Please advise on how to claim for the LTA
Thanks
Arvind
@Arvind
All travelers much accompany the person who is availing tax benefit, so you won't be able to claim tax benefit of your parent travel.
Moreover, from Kolkata to Jamshedpur and return, max allowed exemption would be fare on public transport (bus/train fare). Even if you spend 10,000 Rs on taxi, if a govt bus/train route exists with fare of Rs 500, max exemption would be Rs 500 only on this route.
I traveled Delhi hyd by airline and from delhi -simla -manali-delhi by vehicle in october and I lost the boarding pass, so Can I submit the bill given by package delear i.e. UAE Exchange for LTA claim.?
@Ranjith
Officially there is no need to submit proofs to employer, but it would be needed in case income tax department ask it later.
i have two query
1. suppose I worked in a company from jan 2010 to nov 2011.
my LTA was 1000 per month i.e i got 23000.
In my new company my lta is 2000 per month i.e from dec2011 to march 2012
LTA = 8000.
Can i claim 23000 + 8000 = 31000 LTA?
if no how much i can claim?
2. my company pays LTA monthly bases lets say 1000
i went for travel in august 2011.
How much can i claim?
is it the amount from jan 2010 to aug 2011 or jan 2010 to march 2012?
@Suri
As you have already left previous employer, you can now claim only what your current employer pays.
In case employer pays on monthly basis, max amount which can be claimed in a year would be 12 times monthly amount only.
Can i claim LTA i.e form pervious company and current company(31000) on filling return? i have billls.
@Suri
You cannot claim LTA exemption in income tax return form as form does not have any fields for same.
However you can reduce taxable income by that amount and recompute tax and claim for refund of tax extra paid.
There are chances that income tax department may issue refund. As there will be gap between form-16 and ITR values, income tax department may also raise query to explain the same and show proofs for travel done.