Dear All,
As rightly pointed out LTA is not a statutory payment to be made to employees. Generally, companies frame LTA rules as a policy and as per this policy the employee can avail LTA benefits. But there is a legal provision under the IT act. The broad guidelines are
1. Once the LTA is applicable to an employee it becomes exempt from tax if the employee claims it twice in a block of 4 years and the block started if my memory is right from 1998 - 2001, 2002-2005, 2006-2009, 2010-2013 and so on.
2. In the above case for example the employee claims LTA in 2011 & 2013 then it becomes exempt from tax provided he produces evidence for having undertaken the travel.
3. He has to compulsarily be on leave (as he is on LTA tour) during the period of LTA leave. If by chance he reports for work and tries to create an evidence that he was on tour then the LTA paid will be taxable by the employer.
4.Please note that the expenses incurred by the employee will be permitted only to the extent of travel and will not include boarding and lodging.
5. To the best of my knowledge there is no specific definition of family. It can include father, mother, spouse, children etc.,
6. On the other hand the employee can claim LTA amount each year and the same becomes taxable as per IT act.
7. The LTA amount fixation varies from company to company. Some companies fix a adhoc amount and some others link it up either will Basic + DA or Gross salary.
Trust I have clarified the matter to the extent possible.
Regards
M.V.KANNAN