Understanding LTA and Fringe Benefit Tax: Can Anyone Clarify This Confusion?

Dear All,

Could you please clarify whether LTA comes under the purview of Fringe Benefit Tax? Thank you for your valuable inputs.

Regards,
Praveen

Hi,

LTA is not a fringe benefit. It is one of the few tax-saving salary components still left, provided the required conditions are fulfilled.

Regards,
Devjit

Hi Praveen,

LTA will not come under FBT. It is a tax-saving instrument and can be claimed for exemption every alternate year.

Regards,
Sree

Hi Devjit,

Devjit is correct in saying that LTA does not come under the purview of FBT. It's only the conveyance, tour, and travel for official purposes that comes under its scope.

Regards,

Satyam Rastogi

Hi Devjit,

Devjit is correct in saying that LTA does not come under the purview of FBT. It's only the conveyance, tour, and travel reimbursements for official purposes that come under its scope.

Regards,
Satyam Rastogi

Hi,

Further to my reply, something I should have posted at the first instance - If the employer pays for a private travel undertaken by the employee & his dependants, for example, a private trip awarded as recognition for superior performance, then this private travel is taxable under FBT. The difference between LTA and private travel is if the conditions of LTA are not fulfilled during the private trip, then those trip expenses are taxable.

If the employee undertakes 2 trips in a year, and both meet the LTA conditions, then I guess it is up to the employee to declare which trip is under LTA and which is a private trip paid for by the employer. Obviously, in my opinion, in this case, the more expensive trip should be declared as LTA, since LTA is non-taxable.

Regards,
Devjit

Devajit,

Thanks for your feedback. Could you please advise me on the best solutions for an employee to save on taxes? I would like to compare them with our current salary breakup system.

Regards,
Praveen

Hi Praveen,

Devjit & others are right that LTA is out of the purview of FBT. The exemption of tax is allowable up to two years entitlement subject to the production of bonafide travel bills as per the limits defined in the provisions of the IT Act. Specifically, the First AC train fare between the shortest distance between two points and actual travel bills, whichever is lower, is exempted from tax. The balance amount is added to the taxable amount.

For tax savings structure, simply use the search facility on the top left. You will find relevant postings with details shared by the members.

Regards,
Rajat

Dear Praveen,

LTA is not a fringe benefit. It is a part of the remuneration package paid annually. It is a taxable component. Of course, in a block of 4 years, an employee can avail LTA exemption for two journeys (each to and fro), provided he submits his travel bills along with requisite tickets, etc.

An employee should accompany his family (wife, children, and dependent parents as applicable) on the journey. Otherwise, he is not eligible. LTA can be claimed provided an employee should avail 7 days PL or the number of days as applicable in an organization.

All the best,

S.Amarnath