Kamal Deo Prasad
27th May 2005
LTC is leave on credit.Under this E.g You can take 10 leaves in a year. now , every company has its own rule. Let say you took 4 leaves inthe year. You are still left with 6. Now, if the financial year for which they are assigned gets over, there are different options-
- 1.The remaining 6 Leaves stands cancelled
2.They are credited to your next year account i.e. in next year you can have 6+10 leaves
3.You can be reimbursed for the remaining 6 days.
22nd July 2005 From India, Ahmadabad
LTC = Leave Travel Concession [check this PDF, it is the ordinance LVII concerning Leave Travel Concession http://jmi.nic.in/Ordinance/57_LVII.pdf ]
As far as difference is concerned, both are same with different names as the purpose is to give allowance to the employees for taking vacations.
FAQs about LTA
Basically, it is a monetary benefit that you get on the expenses you incur when you travel.
Here's to clearing your doubts.
1. On what basis can I claim LTA?
If you fulfill two criteria, you can do so:
- i. You should have taken leave from your company
ii. You should actually travel
You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.
2. How often can I claim LTA?
Twice in the block of four calendar years.
This block is not calculated with the start of your employment. The government defines these blocks.
Presently the block is 2002-2005. Since it is the calendar year and not the financial year, it will be from January 1, 2002 to December 31, 2005.
3. What if I fail to avail of it?
In case you fail to do so, there is a carry over option.
Let's say that in the block of four years, you never did claim any LTA.
You can do so in the first year of the next block of four years.
4. What is the proof of travel to avail of LTA?
According to rule 2B, you can produce an air, rail or any public transport ticket.
You can even submit the bills issued by the car rental company if you rent a vehicle.
However, the travel is applicable anywhere in India and not abroad. So an international air ticket will not hold.
5. Is LTA taxed?
You can receive LTA as either reimbursement or allowance.
In case of LTA as reimbursement, it is not taxable.
Let's say your company offers an LTA of Rs 50,000. For proof of travel, you produce an air ticket of Rs 10,000.
In such a case, you can claim only Rs 10,000 as LTA and it will be exempt from tax.
If you do not submit any proof of travel, you will get your LTA but will have to pay tax on it.
If you produce proof of travel, it will not be taxable to the extent your proof of travel is covered.
Let's say you are entitled to Rs 50,000 as LTA as part of your salary. Since you produced proof of travel as Rs 10,000, you will not be taxed on this amount. However you will be taxed on the net Rs 40,000 as per your income tax slab rate.
LTA is not a fringe benefit as the latter are benefits that are usually enjoyed collectively by the employees and cannot be attributed to individual employees.
6. Can both spouses claim LTA?
If both spouses are getting the LTA benefit in their places of work, they can both claim exemption on LTA from their employers and the benefit for four journeys in one block.
They do not have to take the precaution of not travelling twice during the same year.
Moreover, they can take the same family members or different ones as long as they stick to the definition of the members for this purpose.
Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after October 1, 1998, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births (twins or triplets).
7. If I and my wife travel this year, can we both claim LTA simultaneously?
No. You cannot claim LTA twice for the same journey. If both of you take a holiday together and you claim LTA, she cannot.
8. If I am entitled to a particular amount as LTA, but my expenses are higher, can I claim more?
Say in the year 2005-06, you receive on Rs 8,000 as LTA, but spend Rs 50,000 on travel. You can claim exemption only to the tune of Rs 8,000.
For LTC check the LTC ordinance at http://jmi.nic.in/Ordinance/57_LVII.pdf
23rd July 2005 From India, Ahmadabad
The reply given by you was so simple and very informative. Plz let me know some more things on LTA:
1. Is the company obligated to pay LTA?
2. If Yes, should it register itself in any of the govt bodies [something like PF]
3. If No, and as an employee I want to avail this benefit, is there anything that I can do.
26th July 2005 From India, Bangalore
Can you kindly throw some light on Fringe Benefit Tax...
How is it going to affect Employees, whats the hitch for the employers, how to plan & resturcture salary etc...?
Also kindly pass em some template for payroll purposes.
I need to process payroll for the start up i work with. I also want to give them pay slips..
Help me with Both..plz.
26th July 2005 From India, New Delhi
Sorry for the delay in replying...
I am working on a urgent project and am not able to get sufficient time for replying here.... But by next week things should be smoother
1. No, the company is not obligated to pay LTA as per indian law, but generally companies having branches in different geographies and / or having large number of employees from outside the state, do provide with LTA which is then mainly used to visit home town.
3. Availing this benefit, talk with your HR guys and see if something can be added to your compensation structure. Many of the IT companies in Bangalore offer flexible compensation structure wherein you can pick-up your own benefits, limited to fixed CTC.
31st July 2005 From India, Ahmadabad
In addition to the Ajmal reply i want ot add few point, However Ajmal reply is 100% correct,
As said LTA(Leave Travelling Allowance) should be/not a part of your CTC depends upon comapies policy because it is taxable amount, in which some company gives 10/15/20 % of your basic as your LTA,
LTC is some part of it is given by company and the balance is beared by the individidual, it also depends upon the company policy, For that you have to check with HR/Admn. Dept.
1st August 2005 From India, Mumbai
Both your replies have cleared my doubts. But tell me one more thing, as to why would company like to bear my holiday expenses?
One more thing, I cannot ask the HR or the Admin Dept., because I belong to that dept.
3rd August 2005 From India, Bangalore
But most of the companies give it because it has become traditionally the part of the compensation in the industry. Some companies design their own packages, to match the compensation package with that of the competitor / industry, so as to attract and retain best talent..
5th August 2005 From India, Ahmadabad
So if the parents go alone for a tour and the employee and his spouse goes for anotehr tour separately, in the same block, can this be claimed for LTC
ie, if the employee's family go alone(without employee) for a tour, can the employee claim LTC?
10th March 2006 From India, Bangalore
I have a query regarding LTA. I would like to know that whether you can avail tax exempted LTA twice in a block of four yrs is a law and is it same for all or different companies can have different policies and can it be claimed tax exempted every yr on producing the proof of travel.
Also if one can claim tax exempted LTA twice in a bloack of four years, can it be claimed in consecutive years or it has to be alternatively. Say for example if you claim tax exempted LTA in the first yr of the block, Can tax exempted LTA be claimed again next yr??
Please help me by answering the above querries. I need more clarity towards LTA.
12th June 2007 From Germany
LTA can be claimed twice in a block of 4 years and this rule is same for all companies. Even the blocks are fixed..current block is 2010-2013. Also LTA eligibility is based on Calendar year (Jan to Dec) and not financial year.
LTA can be claimed in consecutive years, alternate years are not required but you cannot claim LTA twice in the same year. Also, in case if you have claimed only once in a block of 4 years, that can be carried forward (i.e., you can claim LTA thrice in the next bolck) but the carried forward balance should be used in the first year of new block. I hope that answers your query.
22nd August 2012 From India, Bangalore