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,
Please reply to following queries with given assumptions of getting LTA of Rs 100 per year.
1) I claimed exemption of Rs 100 in 2006. Now I accumulated it for rest 3 years i.e. Rs300, and incurred actual expense of Rs 350 in year 2009, what amount of exemption I can claim?
2) Can I claim for Rs 200 in yr 2007 and Rs 200 in yr 2009 for current LTA block, having been incurred an actual expense to that extent in respective years 2007 & 2009, i.e. twice in block?
Thanks,
Nilesh
@Nilesh
It depends on your employer, if he allows accumulation of LTA amount, then you can claim the whole accumulated amount in one year.
You can only claim twice in a block of 4 calender years. This block is defined by government. Last block was 2006-2009. If you have claimed exemption in 2006. You can only claim once in rest 2007-2009 period.
Hi,
I have a query. I work at Aurangabad, MH and rencently went on leave to native place Trichy in TN. There is no direct flight between Aurangabad to native place Trichy. Hence I travelled as below – I travelled in a taxi from Aurangabad to Pune and from Pune I took the flight to Chennai and again from Chennai I took a taxi to Trichy and return is also the same route. So whether can I claim the taxi as well as the air fare for the LTA.
Kindly clarify
@Oulag
If a recognized public transport system exists between such places, the first class or deluxe class fare of such transport by shortest route, will be taken into account.
hi
i have clamp LTA for twoyear block, i am travel though higer a taxi car amount is 48000/- .my account dept has deceted 4350/- for a tax please guide
AS PER SUPREME CORT DECISSION NO NEED THE SUPPORTING DOCCUMENT AGAINST CLAIM OF LTA SOI WANT TO REMBERSED MY LTA FROM MY COMPANY FOR TAX BENIFIT PURPOSE. IF I WILL NOT GIVE SUPPORTING DOCCUMENT FOR THE LTA CLAIM. SHOULD I GET THE TAX BENIFIT ?
PLS REPLY ME.
THANX
R.K.ARORA
@R.K.Arora
As per supreme court rules, there is no need to provide proofs for LTA to employer, you may claim the travel still and they should provide tax benefit, based on eligibility amount.
So what is the procedure? whom the employee need to submit the LTA claims and how, How the company will be calculating the tax at the FY year? Some empoyers include LTA as a monthly expense. Can you please throw some light on this?
@Akanksha
You have to fill your employer’s reimbursement forms for LTA claim stating the expense incurred and destination.
Pankaj,
I am new to indian taxes and when my employer asked for documents to claim LTA, few of mine colleagues suggested to tweak fare value in air itinerary that I have already travelled. I am hesitating to do that but on contrary I feel being normal human every body will think what is bad in getting little more tax benefit out of it? I am firm that I will not do such but I want to have my colleagues also understand importance of being honest.
Could you guide me what could go wrong if any person submits wrong proofs for LTA to his employer? Be little more explained here so same could be put in front of my collegues
@Undisclosed
Yes, Its important to be honest. Its your own moral responsibility not to cheat.
Thats why laws are there to make people afraid of them and act correct. Unfortunately in India, because of corruption and lack of law enforcement, people are not afraid of law and rules.
It becomes every Indian’s responsibility to understand this and know this rights and duties.
Regarding what could go wrong, Income tax department can raise queries and even call you for scrutiny. They may ask you for detailed proofs like invoice/receipt of payment for air fare etc.
Dear sir,
Our Company is providing Transport allowance at a specified percentage and rembursement of running and maintenance of Car at a specified percentage.
Whether the both amounts can be claimed under Income Tax Act for exemption of Rs.800/- & Rs.1200/- separately or
Any one i.e., transport allowance or reimbursement of running and maintenance of car is to be claimed.
regards,
Viswanadham
@Viswanadham
Only one out of these can be claimed as tax free.
Max 800 Rs can be treated as tax free in case of transport allowance, but in case of maintenance, it may go higher.
Dear Pankaj,
My Co provides LTA as part of Monthly income. now if i claim the amount at end of FY shall i get tax benifit?
Can i do the same thing in next FY? does the LTA slab of 2 yrs affect this? If yes how to get the TAx benifit?
Please guide as i have lost my money since I didnt provided docs for this year LTA/.
@Mangesh
Yes, you should get tax benefit if you have traveled in India.
Some companies have policies that you can only claim a travel in same financial year, e.g. if you have traveled in Jan 2010, you can claim that in FY 2009-10 and you will get tax benefit.
2 out of four years rule work on calender year block. You can only claim max 2 travels done in block of 4 years, 2006-2009. Similarly next block is from Jan 2010 – Dec 2013.
Company can cut tax on LTA amount and give you the amount, in case you have not claimed for it.
Pankaj,
Thx 4 th prompt reply.
Ok, correct me if I am wrong, see if I claim my LTA benefit in FY2010-11, and FY2011-12, I am eligible to get the the benifit OK. and since its 2claim n 4 yrs slab, I can’t make claim in FY12-13, right?
But as my Co has added LTA as part of my Monthly salary, so since I cant make the claim in FY12-13, the LTA during that FY will be taxable, is it?
@Mangesh
Yes, you are mostly correct. In case you are not eligible for claim, company will give you amount after deducting TDS.
But also keep below things also in mind.
– You can not claim for more than one travel done in a calender year, e.g. you can not claim two travels one done in Feb 2011 and one done in Aug 2010, Although they are in different financial years, but they are in same calender years.
– You can travel in Aug 2010 and still claim it in Aug 2010 or March 2011.
hey Pankaj,
Thanks for the amazing clarification.
now Since my Co. has included LTA in monthly salary, I must get the deducted LTs.
Really appreciete your reply, thy have cleared my doubts.
Thanks again.
Dear Pankaj,
In the event that I claim my LTA, and resign from the job; Would the amount be claimed from me by the organization on a pro-rata basis?
If yes, is the same applicable for medical reimbursements as well?
Regards,
Jatin.
@Jatin
If year is not completed, employer provides LTA and medical reimbursements on pro-rata basis.
Suppose if you have worked for 8 months, you will get only 8 months components of LTA and medical.
As per my understanding, medical reimbursement is calculated from April-March year basis whereas LTA is calculated from Jan-Dec basis for prorata.
Example – suppose I quit on 1st August, then i should receive prorata LTA for 7 months and Prorata medical for 4 months.
Pls correct if this is correct.
Thanks.
@Kedar
LTA can be claimed as non-taxable 2 times in 4 years block of calender year. But companies do it generally on financial year basis. All amount till march is paid off in March.
hi , I want to travel to Darjeeling via kolkata.from Bangalore I have some relatives in Kolkata..Can i stay for some 2-3 days in Kolkata and then proceed back to my destination in banglore and claim the entire amount as LTA
@Arvind
There should not be break in between the travel. In this case, you can claim Bangalore-Kolkata return fare for LTA.
Then can claim the taxi fare that i have used for local sightseeing at kolkata.say i use the taxi for 3 days and it comes to Rs 5000/- . can i claim those amounts ?
@Arvind
You won’t be able to claim taxi for local sightseeing.
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 recognized 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,
I would like to know if international travel can be claimed under LTA exemption?
@Keziah
No, International Travel cannot be claimed under LTA exemption.
Hi Pankaj,
One more clarification, what is the limit of LTA allocation out of one’s gross salary as per IT rules? Is it maximum of one month’s basic? If not, what is the usual norm?
@Keziah
There is no standard rule for maximum LTA amount. But generally its a standard practice of most of the employer to keep it maximum to one month’s basic salary.
Pankaj,
If I avail IRCTC RAIL Packages for holidays, can the entire amount be availed for LTA?.
Also If the very next day I am touging a different place can both of them combined for LTA benefits.
Please reply
@Devendran
Only the travel fare out of this package will be non-taxable as per LTA rules.
You can take only round trip distance between two points, there should be gap in between.
Hi Pankaj,
My Querry is,i have performed journey in block 06-09, but the amount of bill is more than the eligible amount upto the end of that block.
Should the remaining balance of the invoice be carried forward & paid in the next block?
Thanks & regards
Sunil
@SunilBhatia
Remaining LTA amount cannot be carried forward to next block. Exemption for one journey can only be taken once.
Can a company define below LTA policy:
1) LTA amount will be paid only for Level/Grade 4 and above employees.
2) LTA amount will be paid to employees below Level/Grade 4 after been with the company for one year (But the company offer letter says LTA(Grade-Wise Fixed Anual Benifit)
I am a grade 2 employee, I not will to use LTA at all. But company is not paying me that amount as part of monthly salary on pro-rata basis. Company policy says G2 employee cannot not claim LTA in the first year (Means LTA will be given but after taxing that to after one year).
My question is can a company
a) Define different LTA rules based on employee grades?
b) say that LTA will not given to employee in first year of the employment?
Please give clarity on this.
@FranklinRayappa
LTA is a privilege and not a right. Company may form a policy to only include LTA in CTC for people in higher band.
This is company’s policy and if you have signed detailed offer letter, you have to follow that.
Mr. Pankaj
i have a question. my father is a govt employee. is it possible for to avail LTA (or LTC) for only 1 member of the family? if so, are there any conditions on availing LTC for rest of the family mambers?
i know it was not possible few years back, but recently someone told me that it is possible now.
please reply..
@AtulSunsunwal
For claiming LTA benefit the employee must travel, there can be other family members also traveling with him/her.
In case your father has to avail LTA benefit, he must be a part of traveling group.
Hi Pankaj,
I have taken the air tickets on my wife’s credit card. But we both travel together. I have all boarding passes. Also one more problem is name on the card was her previous name, surname which was there before marriage and on boarding pass her name is mentioned as name after marriage. So, can I claim LTA for this travel?
Thanks,
Kailash.
@Kailash
That should not be a worry. Boarding pass should be good for proof of travel.
Moreover, as per court orders, it not mandatory to provide proof of travel to employer for claiming LTA.
Since one has to take off from office for the period of LTA travel, can I use my CLs and Compensatory Offs(offs in lieu of working on off days) instead of my Earned Leaves? OR Is it mandatory to use ELs for claiming LTA? I wanted to save my ELs for later use or encashment.
@Sanjay
This is a company policy to provide LTA for CLs or not.
But most of the companies have policy of providing LTA only against earned leaves.
Hi! Is it possible to claim LTA for travel from delhi to Manali by taxi wherein I want to travel in a Honda CRV or a Fortuner as I have a large family and claim the exemption. The bill would be approx. Rs. 90,000/-
@Vaibhav
As per income tax rules If a recognized public transport system exists between such places, the first class or deluxe class fare of such transport by shortest route, will be taken into account, So you won’t be able to claim 90,000 for this route.
Hi
Can you please advise I have lost the boarding pass fpr my travel. However I have the e-ticket for the same. Can I claim LTA for the same?
@Dasgupta
Although travel proofs are no more required to be shown to employer so you can claim LTA without proofs too, but they have to kept in case a query from Income tax department comes.
Hi Pankaj,
This may be a silly question, but i have to ask it.
i have paid for my wifes travel, twice this year, i have not travelled with her, CAn i show my bank statements and other proofs that i have paid to claim LTA, or do i have to travel also?
@Vijay
You cannot claim LTA for a trip, of which you were not a part.