Curious About Leave Travel Allowance? Let's Dive Into Your Questions Together

Understanding Leave Travel Allowance (LTA)

Please explain to me about Leave Travel Allowance (LTA). I have the following queries:

• Whether LTA is paid yearly or monthly?
• How can we show LTA on the salary slip?
• Is it compulsory to give LTA to confirmed employees, or does it depend on company policies?
• Is there any law for Leave Travel Allowance except the Income Tax Act 1961?
• Please share Leave Travel Allowance policies.

Regards

Understanding Leave Travel Allowance (LTA)

There is no statutory obligation to provide this facility to an employee. So, it is entirely at the option of the company. Therefore, a company has to frame its LTA policy. Nevertheless, LTA is not like HRA or conveyance allowance to be granted every month. It is a Leave Travel Assistance/allowance—a facility granted either once a year or every two years depending on the company's policy.

Regards,
B. Saikumar
Mumbai

Please see the link below and inform me whether this discussion is right or wrong.

Leave Travel Allowance (LTA) Overview

LTA is a part of the salary and constitutes 10% of the Basic. It is deducted from the salary every month, and at the end of the year, you can claim it by producing the tickets after taking a minimum of 4 days leave. If anyone does not claim it, then it will go to the company's accounts, which is a benefit for the company.

Attribution: https://www.citehr.com/1316-lta.html#ixzz1xZZrBa57

To my knowledge, LTA is a facility provided by a company to reimburse an employee for the expenses incurred by them on the production of bills during travel to a place in India for which they avail leave. Thus, if the company undertakes to reimburse the expenses of an employee, how is an employee made to pay for their own expenses by deducting 10% of the basic pay?

The second anomalous situation is when the company deducts 10% of the employee's salary to meet LTA expenses. The amount deducted becomes part of the employee's salary, so how does the same amount get appropriated by the company if the LTA is not availed by the employee? It should go back to the employee.

A company may show a certain LTA amount as part of CTC, but it cannot deduct it from the actual salary received by an employee. A company may adopt a formula to determine the quantum of the LTA amount. For example, a company may stipulate 10% of the basic as LTA to be admissible to an employee on the production of bills once a year/two years. But, how can it actually deduct 10% of the employee's basic pay? The company is not only making the employee pay for their own expenses but also has the audacity to show it as a cost to the company while appropriating the whole amount to its account if unavailed by the employee.

Others' views are also invited.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

If LTA is allowed only twice in a calendar year, how will employees benefit from LTA when deductions are made from their salary every year?

As per my salary, Rs. 57,000 is LTA, and I have traveled to Goa from Bangalore in a car, which cost me Rs. 38,000, including the daily driver allowance. I have taken 5 days' leave in December 2013 and forgot to submit the bills in the investment proofs this month (Jan-14). Can I submit the bills related to LTA when I am doing income tax return submission in July 14?

Regards,
Rajesh

Understanding Leave Travel Allowance (LTA)

This subject has been discussed countless times in this forum. Use the search option to learn more about LTA.

Purpose of LTA

LTA is meant for promoting domestic tourism. It depends on the company policies and is paid annually or bi-annually.

Tax Exemption on LTA

Tax exemption is available twice in a block year of four years. The next block year is 2014 - 2017. No cap is set. The shortest air or rail journey cost is considered for tax exemption.

Eligibility for LTA

Self and dependents of the family are eligible to avail of the LTA journey cost.

I am working as an HR generalist with a startup and would like to know a few things about LTA. In my company, LTA is given as part of CTC, and we are providing the same to the employees on a monthly basis after deducting the taxes. We have stated that at the end of the financial year, if they provide proof of travel, they can get the tax deduction. In many companies, the LTA is given at the year-end only. So kindly let me know if our company is following the correct practice.

Thanks & Regards,
Divi Singh
[Phone Number Removed For Privacy Reasons]