Hi, I have a query regarding LTA Tax Exemption. My company has two options for Payment of LTA:
1. Monthly Payment (in which case, the total LTA will be divided and paid in 12 months).
2. Yearly Payment (in which case, the amount will be paid at the end of the financial year).
However, the finance people in our company say that the exemption is allowed only if it is paid yearly. If it is part of the monthly payroll, the LTA amount paid is mandatorily taxable.
Is this clearly stated in tax law?
Is this clearly stated in tax law somewhere? If so, can someone give me the reference clause from the taxation law that clearly states LTA tax exemption is not allowed in the case of monthly pay?
Whether it is paid monthly or yearly, I am going to claim only what I am entitled to claim. In that case, why are exemptions accepted only for yearly payments?
If someone can provide clarification with reference to tax laws rather than simply providing an understanding of an individual or an organization, it would be of great help to me.
Thanks in advance.
From India, New Delhi
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1. Monthly Payment (in which case, the total LTA will be divided and paid in 12 months).
2. Yearly Payment (in which case, the amount will be paid at the end of the financial year).
However, the finance people in our company say that the exemption is allowed only if it is paid yearly. If it is part of the monthly payroll, the LTA amount paid is mandatorily taxable.
Is this clearly stated in tax law?
Is this clearly stated in tax law somewhere? If so, can someone give me the reference clause from the taxation law that clearly states LTA tax exemption is not allowed in the case of monthly pay?
Whether it is paid monthly or yearly, I am going to claim only what I am entitled to claim. In that case, why are exemptions accepted only for yearly payments?
If someone can provide clarification with reference to tax laws rather than simply providing an understanding of an individual or an organization, it would be of great help to me.
Thanks in advance.
From India, New Delhi
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Understanding LTA Tax Exemption
Your finance team has communicated correctly. The LTA amount is a reimbursement, meaning once every two years, the amount spent on LTA is exempt from tax. This exemption applies upon submission of your travel bills, subject to your eligibility criteria. If you wish to avail of the LTA amount, then within a span of four years, the amount for two years is taxable.
In the scenario where you prefer to avail of the LTA amount on a monthly basis, you will need to pay tax. It is advisable to discuss this matter in detail with your finance team to fully understand and proceed accordingly.
Thanks and regards,
Kameswarao
From India, Hyderabad
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191Your finance team has communicated correctly. The LTA amount is a reimbursement, meaning once every two years, the amount spent on LTA is exempt from tax. This exemption applies upon submission of your travel bills, subject to your eligibility criteria. If you wish to avail of the LTA amount, then within a span of four years, the amount for two years is taxable.
In the scenario where you prefer to avail of the LTA amount on a monthly basis, you will need to pay tax. It is advisable to discuss this matter in detail with your finance team to fully understand and proceed accordingly.
Thanks and regards,
Kameswarao
From India, Hyderabad
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201901294424Tra de Circular No. 6T of 2019- Exemption from payment of late fee us 6 (3) (1).pdf
Payment of LTA.doc