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
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.
Hi Pankaj,
Can I submit, my hotel bills (Lodging and boarding) also for LTA claims
@Ranjith
No, hotel bills can not be used for LTA claims.
Dear Sir / Mam,
I have working in my present organisation since Feb’08 till date i.e., Nov’09. I claimed LTA in the month of March’09 for the year 2008 (which was paid to me in the same month itself). Now, I’m leaving this organisation this month ie., nov’09, joining another one. Thing is that I got to know that since I can’t claim LTA twice a year, I wont be getting it(for the calendar year 2009) in my full and final settlement. When I asked that this is my earned LTA and can be given by deducting taxes in my full and final settlement, I was told there is no such rule, LTA cant be claimed twice in a year and if not claimed i cant avail that. That means m not getting it anyway.Kindly help me out as I don’t know much about these rules and regulations. If it is like these then why it is mentioned in CTC, if I’m not getting it. If there any ways to avail that.
Regards,
Anee Shahu
@Anee
Different companies have different rules, some companies pay LTA on pro-rata basis if an employee leaves before completion of year. They pay by deducting income tax if LTA claim is not made.
Some companies pay LTA if full year has been completed. You must read the detailed offer letter on which you signed during joining.
As your last travel date was in 2008, for which you claimed LTA in 2009; you are eligible to claim LTA again in 2009 for year travel in 2009 (if you have not claimed twice or more before during year 2006 and 2009). In this case, you must claim a travel done in 2009 and they must pay you on pro-rata basis (for Feb’09 till Nov’09).
Dear Pankaj,
In my appointment letter it has been mentioned that LTA is paid on yearly basis and no such detail is given regarding that.One more thing I travelled in March’ 09 and i claimed LTA in March’09 for the year 2008 since I didnt took LTA in 2008.Again my LTA amount has been accumulated for the year 2009. Whatever you told I was thinking as per that (since I dont know much), so as per that I should get my LTA after deducting taxes but I’m told I cnt show two journeys in the same year.
Well, my comapne is a public limited company. Kindly let me know that can company’s have rules of not paying the LTA. Because whatever you have told is right company can pay by deducting taxes if I’m not applying for it . But in my case they are saying I cant be paid. Can you help me out? Please give me some rules, some sections where it has been mentioned so that atleast I can fight for my right
Regards,
Anee
@Anee
You can not claim LTA for more than one travel in a year. As you have already claimed LTA for travel in 2009, you are no more eligible for claiming non-taxable LTA in 2009, you can get LTA amount from your package but after tax deduction.
Regarding LTA in package, its totally in employer’s hand to provide and to not provide LTA on pro-rata basis. There is no legal angle/right in this.
Dear Pankaj,
Good to see your reply and help you are providing…
I have one query to ask. I am working in a organisation in which i am eligible for LTA of around 14000. This is the first time i am going to clain for LTA for the period of 2009. During this year i have done my travel at two places. One is in aug 2009 and the other is in nov 2009.
1) Now my question is can i claim for these two places in this year?
2) My Aug travel cost 5445 and nov travel cost is 9897, can i claim for both of them?
if yes then how?
Thanks for your help and reply in advance.
Vikash
@Vikash
You cannot claim two travels in a calender year. Its better that you pick up the one with more cost.
Thanks a lot for your valuable information and time.
Hi Pankaj,
I went on Kerala tour and having 3rd A/C rail tickets for round trip from Mumbai to Ernakulam as well as taxi bill for local transport . Taxi bill amount is quite higher than the rail fare, can I include it as tax exempt?
As employer need not to collect proof, how the I-T dept is going to verify them?
@Sumith
You may produce any type of bills but the reimbursement will solely depend upon the income tax rules related with LTA.
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.
IT department won’t verify the proofs at the time of tax filing but they can put a query and ask for details after-words.
I am residing in NOIDA and travelled from New Delhi domestic airport to GOA and back
Please advice, if i could claim to and fro local convenyance (NOIDA to New Delhi domestic airport ) along with airfare as part of my LTA claim.
If yes, please send me some information , so that i can show it to my company
@Saurabh
As per the income tax rule regarding LTA, 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.
So, in this case, the public transport between Delhi and Noida travel won’t be much and it won’t be a good amount to be used in claim.
Hi ,
We have policy of paying LTA as percetage of basic pay. After getting LTA amount, if employee traveled on weekend or on holidays, can he claim expenditure spend by him as a deduction from Income tAx if following in Yearly block? (Means without taking any leave)
@Karanjkar
Yes, you can claim LTA expense for the travel done on weekends of holidays also.
I rented a car and used my LTA facility.
Now i produced car bills from end to end. But my company finance guy is saying, i cant claim the eligible amount, he calculate the shortest train distance from end to end and gave Rs. 1.20 (One rupee twenty paise) per kilometer.
With train Rs. 1.20 i am not able to claim 30% of my eligible amount.
Is it right calculation, or i have any choice to claim amount i am eligible.
@Srinivas
As per income tax laws, first class A/C train fare or other public transport for shortest distance between the points is the maximum amount which can be considered for non-taxable amount. So company finance guy is acting as per the income tax rules.
I am entitle for LTA on yearly basis , in block of 4 years say 2006 to 2009 , if i takes LTA once in 2 year , does the amount which i am suppose to get on yearly basis is taxable.
Say my LTA is 30 ,000 per year as per my CTC and if i claim it once in two year i.e 60 ,000 , then how much amount is taxable assuem that i am producing 60,000 travelling bill of my family . i.e my self spouse and two childern
@Madan
As your annual LTA amount is 30K and LTA can only be claimed as non-taxable, twice in a block of 4 years; maximum non-taxable amount can be 30K only.
However, If your company has not given you allowance for last year and you are getting 60K combined this year only, Then you can claim whole 60K as non-taxable.
Dear sir , I would like to clear certain querry.
1. can employer deduct the tds on current year LTA and Bonus (April2009 to March 2010 ) , which are supposed to be paid after Mach 2010.
our company has deducted the TDS on LTA and bonus for FY 2009 to 2010.
@Madan
The variable amounts (like bonus and LTA), should not taxed before they are paid. Please ask finance people from your company the reasons for deducting the same.
Sir,
i had availed LTC by visiting Gauwahati from mumbai in the last week of December,2008 by The King Fisher Airlines. For this trip i had availed advance from my dept. in the last week of Oct,2008 and booked the tickets on 7th November,2008 and submitted the bill in the first week of January,2009 for reimbursement of the balance amount. Now my office PAO says that my LTC bill will be processed as per the LTC 80 Scheme. In this regard i request u to clarify whether i should be paid as per the original ticket fare or as per the scheme which is not existing at the time of my booking the tickets which would incur huge loss toss to me .please clarify.
with regards,
sreedhar
@Sreedhar
The circular was issued on 4th dec, by Govt of India (Read here for the circular).
Refer to 2nd point in circular, It clearly says that the order will be applicable in case of tickets booked on or after the date of issue. Tickets booked between 10 Nov, 2008 and the date of issue of these orders, LTC claims may be processed for clearance provided full fare economy tickets have not been purchased and no other benefit except air travel, have been availed of.
Please show this circular to office finance department.