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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dear pankaj,
found yuur site pretty informative.would like to ask something.i work in a public sector company.recent wage revision has inluded the leave travel allowance in salary as perks.does income tax act lay down any rule on mode of travel for availing tax concessions eg-rail.ship or air.
@Sanjay
Railways and Air travel both can be reimbursed under LTA rules to a certain limit, Railways to first class AC and Airfare to economy class fare of national carrier (indian airlines)
Very absract and informative. Thank u.
Please advise me on the following,
I have received INR 85000 as LTA as monthly instalments in my salary. Employer advised me to claim for tax exemption while filing returns, as the same is paid as monthly installments.
Please advise me whther i can deduct this amount from the Head salaries,
TO WHOM I HAVE TO SUBMIT THE BILLS.
IT dept advises not to attach any thing. But my earnings under salary head in Form 16 and ITR 1/ SARAL 2 shall vary due to the LTA.
@Bhaskara
You can deduct same from head salaries at the time of return filing, but this may create issues as Form-16 numbers and ITR numbers won't match. IT department won't have any clue that why there is a mismatch as there is no LTA block on return.
Why your employer is advising to declare it in return. Its a salary component and employer has to approve the travel and adjust the same in TDS.
Hi Pankaj,
My LTA entitlement is Rs 56000/- whereas I could submit the invoice / proof only for Rs 50,000/-. My employer says, i am entitled only for the amount of travel proof submitted. Is this correct? As far as I know, I am entitled for entire Rs 56,000 where in Rs 6,000 is taxable for not sumbitting the relevant documents.
Please advise.
@Sanjay
In case LTA is a portion of your CTC (cost to company), they have to pay full amount to you.
What they can do is to pay only the amount for which the proofs have been submitted now and pay rest 6000 after deducting tax at the end of financial year.
So what they are saying regarding rest 6000. Will they pay at end of financial year or won't pay.
can you kindly answer the query relating to ltc?In case block of four years for LTC rule is not applied for contractual employment for one year,whether IT is to deducted for the entire LTC claim?
C.vishwanathan
@C.Viswathan
Its not necessary to have same employer in Block of 4 years, so you can avail LTC tax exemption even if you are on contract. But your CTC must have a LTC component to do so.
Dear Pankaj,
Would like to know is there any maximum limit to lta eligibility in one's ctc.And how much lta amount is exempted under income tax rules.
@Brinda
The LTA portion is decided by employer as per their policy.
Some company have max one month's basic salary and others have a higher limit. So there is no standard rule on that.
Whole of the LTA amount which has been spent on travel inside India within the rules, is exempted from income tax 2 times in a block of 4 years.
Very informative site, thanx.
If I make a booking in March for travel in April, is the amount paid eligible for tax exemption?
@Advaita
LTA can only be claimed once travel has been done.
As you will travel in April, you may submit the to your employer after that.
I am a salaried employee with an indian IT company. This year I have availed tax-free LTA in April, 2010 against my LTA entitlement for FY 2008-09 (i.e. agianst previous block of 2006-2010). Now when earliest can I avail next tax free LTA. Basically, I want to know-
1) Since , non-taxable LTA can be availed maximum once in a year for one travel only.
Can it be claimed twice in 1 financial year. i.e. for 2 journeys- dec and jan?
2) If I travel during December and claim LTA in January, then for which year this LTA claim will be counted- year in which I travelled or the year in which it was claimed for re-imbursement?
@Sandeep
1. LTA can only be non-taxable for max one travel in a calender year, but as financial year runs April-March, most of the employers consider financial year for calculation. As your CTC will have a LTA component, company will not provide LTA two times in a financial year.
LTA is counted on date of travel and not when you claim it.
Last LTA block of 4 years was Jan 2006-Dec 2009, so if have availed a tax free LTA in April, 2010, It will be counted in Jan'2010-Dec'2013 block. This is first one in this block, so you can avail another tax free claim next year.
2. If you travel in Dec and claim in Jan, the LTA will be considered for Dec only.
Hi,
Very informative article.
However, I have two queries here:
1. If spouse and self are unable to travel together to same destination on the same date but the spouse follows to same destination after few days and both return together on same date, then will the spouse's ticket (onward journey) be eligible for reimbursement?
In my case, the employer says that only ticket for self n ward journey and return tickets of both can be reimbursed. The spouse's onward journey ticket cannot be reimbursed.
2. If one has the air ticket but had lost the boarding pass, then is the ticket itself proof enough for reimbursement.
In my case, the employer says that although the Supreme Court ruling holds true, we are required to submit LTA proofs, as per the existing law, and which in turn forms part of the standard process. The existing process will be followed until the CBDT releases an official notification in the gazette. Is this correct? Has the CBDT released a notification yet?
Can you please clarify?
Thanks in advance for your help!
@Maneesha
1. As per LTA rules, dependent travelers must travel along with head. So employer is correct in this case.
2. As per latest court rules, there is no need to submit original proofs to employer. But still employers are playing safe as Income tax department has not released any notification for same. Now it depends on employer whether they accept or not.
What if LTA is not the part of the CTC, Can that be claimed separately?
@Sheetal
If employer does not pay LTA as a part of salary package, it cannot be claimed.