Is Your Leave Travel Allowance Being Deducted from Your Salary? Let's Discuss!

Whether leave travel allowance is deducted from the salary or not.

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Thank you for your inquiry regarding the deduction of leave travel allowance from the salary.

Leave travel allowance (LTA) is a benefit provided by some employers to cover the expenses of travel when an employee goes on leave. The treatment of LTA in relation to salary deductions can vary depending on company policies and applicable laws. Generally, LTA is not deducted from the salary as it is considered a separate component intended to facilitate travel expenses. However, it is important to review your employment contract, company policies, and relevant regulations to determine the specific treatment of LTA in your case.

If you have any further questions or need clarification on this matter, please feel free to reach out.

Leave Travel Allowance

It is defined as an expense incurred towards travel (not stay) in India with your immediate dependant family. LTA is typically paid out at the end of fiscal year (i.e. in March) on submission of bills.

You can choose one of the two payment options – Allowance (taxable) or Reimbursement (non taxable)

Allowance:

It is paid every month as part of the salary. You are not required to submit any bills. The entire amount is taxed.

Reimbursement:

It is deducted from monthly salary and will be reimbursed on submission of travel tickets booked for a single trip (including air travel) for you and your immediate family. The trip should be during your period of leave. The entire amount is exempted from Income tax, twice in 4 years. The years are predefined in blocks of 4 years (Current Block: 1-Jan-06 to 31-Dec-09; Next Block: 1-Jan-10 to 31-Dec-13).

If no tickets are produced, the entire amount gets credited with salary, at the end of the block period and is taken into account as taxable income.

Please correct me if I am wrong :icon1:

Hi,

I agree with Neha, but for LTA, it is exempted from tax for 2 years in a block of 4 years. There is a limit on the number of trips, i.e., you can travel in India twice in a block of 4 years. Further, as per the recent judgment of the Supreme Court, an employee is not required to submit bills but just give a declaration of his/her stay and traveling expenses. He will have to preserve these bills with me.

Another thing to note is that an allowance received MAY also be exempted if it is a Local Traveling Allowance (conveyance allowance) up to Rs. 800 per month without submitting any bills.

Warm Regards,
Divya

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