Confused About LTA Changes? How to Address HR's New Claim Policy

On my offer letter, LTA is eligible every year, but suddenly HR said it can only be claimed once in 2 years. What arguments can I give in my support?

On my offer letter, LTA is eligible every year, and suddenly HR writes a mail stating it can only be claimed once in 2 years. What arguments can I give in my support? Do advise as well if the company can change their rules as and when desired by them and forfeit the earlier commitments given to employees.

Review Your Offer Letter and Policies

In situations like this, it is important to carefully review the terms of your offer letter and any related policies that may govern LTA eligibility. If there seems to be a discrepancy, you can politely bring this to the attention of HR and seek clarification on the matter. It may be helpful to highlight any specific language in your offer letter that supports your understanding of the LTA policy.

Understanding Company Policy Changes

Regarding the company's ability to change rules and commitments, it typically depends on the language in the employment contract and any applicable laws or regulations. If you believe that changes are being made unfairly or without proper communication, you can consider discussing your concerns with HR or seeking advice from a legal professional to understand your rights in this situation.

Don't be in a hurry. First of all, have a word with the concerned person and find out. If I am not wrong, they may be trying to add some benefit to you because, as per the Income Tax rules, if you avail LTA every year, one year's amount is taxable every two years. Hence, it is better to avail it once every two years so that you can get a tax exemption. They may be changing the rules with the right intention.

Thanks and regards,
Kamesh

I have had a word with HR. The simplest answer given is that the directors feel that today a person might be working with us, but what if he/she leaves after the completion of 1 year of service? In lieu of that case, they will not be paying the LTA to an employee leaving the job.

Seeking Advice on LTA Policy

So now, please advise what arguments can be given so that timely LTA, as per the appointment letter, can be availed every year. Out here, tax is not the issue, but getting the rightful dues is the criterion.

Regards

If LTA is part of the CTC, the employee should be paid once a year. However, for tax exemption, he/she can avail of the LTA twice in a block year of 4 years, subject to the production of travel proof.

Regards,
Pon

Going by the inputs given by you, what your management has done is not fair and professional. They should have considered all possibilities at the time of forming any rule or policy. These kinds of afterthoughts and resultant changes in policies reflect poorly on management and its professional abilities.

There are ways of mitigating the risks of overpayment of annual benefits in case of employees leaving in-between. Assuming annual LTA payable is Rs. 10,000, your LTA Rule can mention that, in the event of an employee leaving the company before the completion of the year, LTA claimed and paid will be recovered on a pro-rated basis from f & f. OR LTA will be paid on the completion of the year, so there is no question of any recovery.

Under the circumstances, you can lodge a protest and demand that whatever is committed in the offer or appointment letter should be honored. If not honored, it is nothing but cheating.

I have had a word with HR; the simplest of answers given is that the directors feel that today a person might be working with us, but what if he/she leaves after the completion of 1 year of service. In lieu of that case, they will not be paying any LTA to an employee leaving the job. So now please advise on what arguments can be given so that timely LTA as per the appointment letter can be availed every year. Out here, tax is not the issue, but getting the rightful dues is the criteria.

Dear members, can you please explain to me what LTA is and how it is helpful for tax exemption?

Regards,
Mili

Understanding Leave Transport Allowance (LTA)

LTA stands for Leave Transport Allowance, which is part of the Cost to Company (CTC) and equals the basic of your salary. It is up to the employee whether they want to avail it yearly or in a block of 2 years. If the employee avails the LTA once every 2 years, then that amount will be tax-free. If the employee avails the LTA every year, then that amount will be taxable.

Regards

Dear Talwarg, all the answers you have received are from senior HR professionals. A two-year LTA amount is not taxable, which is not a benefit for the company but instead benefits you. Go ahead with whatever has been told to you; it's totally in your favor. Best of luck.

Thanks and regards,

Ravibhushan Pandav
[Phone Number Removed For Privacy Reasons]

Understanding Leave Travel Allowance (LTA)

Thank you, Kamlesh, Pon, and Vivek, for your valuable suggestions.

LTA, i.e., Leave Travel Allowance, is provided by the organization where the person is employed. The LTA is not taxable twice in a block of four calendar years (Jan-Dec, etc.) based on actual spending. The journey can be taken to any place within India by road, rail, or air (economy class only). Any claims exceeding twice in a block of 4 years are taxable. The amount of travel allowance provided by the organization depends on the position and CTC of the employee. Generally, organizations provide LTA to the employee, their spouse, and up to 2 children. This provision depends on the HR policy of the organization where the employee is working.

Thanks & Regards,
Vikas Ranjan

If LTA is included in your CTC, the employer should provide it, and you have to submit the supporting documents to exempt the tax.

Regards,
Bem

If your terms of appointment promise LTA as part of the annual package, then you are entitled to claim it. Income-tax rules may tax it, but this cannot change the employer's obligation unless, of course, the company has decided to cut entitlements, in which case it is a renegotiation of the compensation package. I am sure there would be other aggrieved colleagues with you on this. I suggest you discuss with them what they have done about it. Afterward, discuss it with your superior or director.

Regards,
Shankar

What Mr. Kamesh says is 100% correct. First, you should check with your HR people and then decide.

Regards,
Murugan B
HR Manager
Hospitality Industry

LTA is being abused by many companies now. One has to be very judicious about it. That's why people are now looking at In-Hand Salary and not at CTC.

Regards,
Niky

Please advise, when I claim my LTA in a block of two years, will I be claiming only for one year or for both the years together? Our HR says you can only claim for one year after the completion of two years.

Assume that the annual LTA committed to you as per the appointment letter is Rs. 10,000 per year. You should receive Rs. 10,000 every year. It will be taxable twice and tax-free twice in the block of four years, as per income tax rules.

If the company says they will only be paying LTA twice in the block of 4 years under the pretext of income tax provisions, then they should pay double, i.e., Rs. 20,000 twice in the block of four years. The company should not be concerned about income tax. Income tax is paid by the employee and not by the company. They should pay Rs. 10,000 every year as committed; you will end up paying a maximum income tax of 30% on Rs. 10,000.

Claiming LTA in a Block of Two Years

"Please advise: when I claim my LTA in a block of two years, will I be claiming only for one year or for both the years together? Our HR says you can only claim for 1 year after the completion of two years."

As per the rule, the original LTA block period is two years. HR might have changed it to once every two years instead of annually. You can seek an explanation from your department.

Regards,
Ajit

There are some options to avail LTA, each having certain conditions. If you want to avail LTA yearly, there will be a deduction of tax. In a block of 2 years, there will be no tax deduction, but you have to produce journey documents (tickets, bills, etc.) and leave availed.