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
I wanted to know that I worked in a company for just less than 2 years and did not claim any LTA. Now that I m leaving the company, is it still my right to get the LTA amount since I haven’t taken a 5 days leave nor have I claimed it yet?
And if yes then will i be paid the whole LTA amount or taxable LTA amount?
Also the HR head has refused to give the LTA amount (don’t know for what reason) but if it is within my rights to get the amount then what step shud i take now?
@SunBj
If LTA is a part of your CTC (cost to company) structure, then company should pay you even if you don’t claim for it (after deducting tax).
In your breakup/offer letter, this must have been written.
Legally they are bound to pay you components mentioned in your CTC.
Also, I worked for just less than 2 years in this company. Could that be the reason behind HR head’s refusal to reimburse the LTA amount?
If not then please guide me as to what step shud I take now against them to get LTA amount.
@SunBj
If LTA is part of your annual CTC and you have not got it since last 2 years. You should be getting it.
Some companies only pay this component at the end of year.
Please read your employer’s policy documents for clarification on same.
Dear Sir,for when this rule is applicable as I also have not recieved LTA balance in last 3 years though it was in my salary package.
@Vinay
If its in your salary package, company should have paid this amount after deducting taxes.
Please contact your HR/Accounting team regarding this.
Hi Pankaj,
For the FY 10-11, I had an LTA allowance of about 30000 which was included in my CTC. But unfortunately I have not submitted the proofs with in the time to my employer as I am out of station for two months. I lost the reiumbersment for that from my employer. Can I claim the same in my return filings.
Please help me out in this.
Thanks
@Sumanth
If it has not been claimed with employer, they may have paid you after deducting tax on it.
LTA is a employer provided benefit and form-16 must show exemption for the same.
Income tax return form does not have any section to provide this detail.
You may reduce taxable salary by this amount while filing income tax return, but income tax department may raise a query to explain the mismatch in Form 16 and ITR. They may even ask travel proofs to prove the same.
hai pankaj,
i joined my present employer in sep2010, i gave my resignation on july 2011.
i didn’t complete 1year service in the company.will i get the LTA amount from the company.(LTA is part of my CTC)
@Binu
This depends on your employer policy.
Some employer can provide LTA on pro-rata basis for the months worked, but some may only pay once full year is completed.
Please check your company policy document or confirm it from HR department.
Greetings Pankaj,
I have not availed my LTA ever in my career. I am plannin to do so for the first time. I am planning to travel from Bangalore to Delhi and then from Delhi to Trivandrum by 1st AC Train. Then from Trivandrum I am planning to fly to Bangalore. Please let me know if i can claim the LTA tax exemption for the entire amount if it is withing my the LTA Limit provided by the company.
Cheers
Anish
@Anish
Only shortest distance route is considered for LTA exemption.
So if go tom Bangalore to Delhi and then Delhi to Trivandrum, maximum exempted amount will be Bangalore-Trivandrum fare (on 1st class AC Train/economy class airfare on national carrier).
If you claim for more than LTA limit provided by your company, you will only get it maximum by limit only.
If an LTA is claimed as per the company’s policy, does the employee has to support the voucher with Boarding Pass.
@Shirish
Employer may ask boarding pass for air travel proof.
I am working in a Pvt. Ltd. company more then 6 years. Now I am leaving the company. They have not shown in my appointment letter any gratuity terms ( only written in every year all other terms remain unchanged ). Also there is no PF & ESI facility in the company.Can you help me that my gratuity become or not ? Also they have not given me any leave encash me till today. – Thanks & regards- Rajesh
@Rajesh
If your CTC structure has gratuity component, then you should get that. Some of the employer don’t have this component. If that’s the case, you won’t get any gratuity.
Leave encashment is also a employer specific policy. Please consult your company’s HR for same.
Hi Pankaj
Can u please suggest if Tour packages (of dependants) be claimed under LTA?
regards
deepak
@Deepak
Only travel fare part (Air/Train/Bus fare) can be claimed for exemption and not the hotel accommodation or sight-seeing.
hi Pankaj,
I would like to know what is the % of tax on LTA?
As mine lta amount is 15000 per year n i dont hav any plan of traveling.
@Snehsri
LTA will be added to your taxable income and taxed as per your slab rates, just like another salary component like basic salary.
It may be taxed max at 30% per if you fall in that category.
Hi!
I have one small clarification. While calculating IT we will consider LTA also. Then how it will be Tax Free when claiming LTA??? Pls clarify.
@Suha
If LTA amount is paid without claim, it will be taxable. But if its paid on a eligible claim, it would be non-taxable.
Hi Pankaj,
I have recently joind a new company.
When I was in my previous company, i accumulated my LTA for FY10 and wanted to claim cumulativeley in FY11.As I have now resigned from my previous company without claiming LTA, the company has given out total accumulated LTA after tax deductions in full & final settlement as per rules.
My new company pays me LTA monthly.Is there any means that total accumulated LTA which was tax deducted earlier due to leaving previous company, be clubbed togther with LTA from new company to make use of LTA benefits for travel?
@Ashish
Amount already paid to your by your employer as taxable income cannot by clubbed now into new company’s LTA.
Now you will be only able to claim deduction for LTA amount paid by new employer.
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.