Understanding LTA: Is It Paid Annually or Only During Exemption Years?

Understanding Leave Travel Allowance (LTA)

I needed some information on LTA. I am aware that an employee can claim exemption two times in a block of four years. What I am confused about is whether LTA is paid every year by the company to an employee. Any more details will really be appreciated.

Regards

I am attaching herewith brief notes on the LTA policy. I am sure this will give you adequate information on this subject.

Regards,
Sravan

Dear Ayesha,

There are two things to consider: firstly, LTA payment made by the company, and secondly, LTA exemption from the Income Tax Department. If the LTA is included in your CTC, you will receive the LTA amount every year. Some PSUs do not include LTA in the CTC, and in such cases, the employer pays it once every two years.

Regarding tax exemption, you can only claim tax exemption once in a block of two years.

I hope I have communicated what you wanted to know.

Thanks and regards,
Pranab

Some companies do give LTA once a year. In this case, the employer shows the first-year LTA as an advance, and after the completion of the second year, they consider the sum of two years as LTA.

I hope your doubts are cleared.

Thanks,
Siba

Dear Ayesha,

I wish to bring to your notice the system prevailing in PSUs/Banks.

In some PSUs, in every four-year block, which is subdivided into two two-year sub-blocks, an employee can avail:
i) One LTC (Leave Travel Concession) for a limited distance/to Home Town
ii) One LLTC (Liberalised Leave Travel Concession) to any place in India/Home Town.
This can be availed for self and family (dependents).

However, if the employee is staying alone, then he will be eligible for one LTC to Home Town every year/One LLTC and 2 LTCs in a four-year block period.

Some of the organizations are having Leave Travel Assistance/Allowance in place of LLTC, wherein a lump sum of money is being paid to the employee.

To avail this, the employees will be expected to utilize a certain number of days of leave/holiday/offs and submit the application after getting the same approved by his reporting officer.

Since the liability of this is spread over a four-year sub-block provision may be made on a yearly basis in the budget.

Regards,
Premson.

LTA can be availed every year provided that it is included in CTC (like private companies and MNCs do), and you will not be eligible for any tax exemption more than once in a 2-year period within a 4-year block.

If you are employed in the public sector or government, you will be reimbursed or paid LTA based on your travel ticket in accordance with Income Tax rules.

So, it purely depends on whom you are employed with and whether you want to avail tax exemptions or simply hang around.