Confused About LTA in IT Jobs: Do You Keep the Amount if You Don't Travel?

This is my first job in an IT company, and in my CTC, there is an LTA component under flexible benefits, amounting to Rs. 50,000. I am very confused by this component and wish to know if I do not go on travel leave (i.e., do not avail LTA), will I get the amount set for LTA after taxation, or will it be retained by the company? Also, I am uncertain if this rule is uniform across all IT companies.

I have searched through multiple forums, but the responses are ambiguous. Some suggest that the amount remains with the employee even if not availed, while others mention it goes to the organization. Please clarify my concern as it will help me make an informed decision about joining the job.

Regards,
Sainnni

Understanding LTA as Part of Employee Benefits

LTA as part of employee benefits can be availed only by traveling. At the same time, LTA as a component of CTC should be considered part of the salary, which is paid once a year. If proof of travel or a declaration of the journey undertaken is provided, the employee will get tax exemption subject to IT Rules. (For the Income Tax department, proof of travel, i.e., journey tickets, and hotel bills, are not required; only a declaration by the employee is sufficient).

LTA Payment Frequency and Tax Exemption

LTA as an employee benefit will be declared as payable once every two years. If it is given annually, there should be a specific mention in the company's travel policy. CTC, being an annual component of salary, should be considered payable annually and not just once a year. In such a scenario, the company's travel policy cannot make it obligatory to produce journey tickets and hotel bills to receive the amount. The policy can state that tax exemption for LTA can be availed once every two years, and for that, journey tickets should be provided. However, under no circumstance can the company consider the amount offered to the employee as part of the remuneration.

Regards,
Madhu.T.K

Dear Sainni,

Please contact your HR Manager and ask them how to claim the said amount, as the procedure differs from company to company. In some companies, staff will book an air ticket equivalent to their limit, and upon receiving the printouts, they will cancel it. The booking and cancellation charges will be at your cost.

During CTC negotiations, you should have considered opting for different perks instead of choosing LTA. However, since this is LTA, unlike LTC in government companies, applying for leave for a certain period and claiming the said amount will be done in some companies. Please approach your HR Head immediately to get this clarified.

Regards,
NV Subba Rao
[Phone Number Removed For Privacy Reasons]

Understanding LTA Policies in Your CTC

As you are aware, LTA is a part and parcel of your CTC. However, there may be some LTA policies in every company, which are as follows:

- Some companies maintain that employees should go on leave for a minimum period of 4 days and produce the exact bills along with travel tickets. The company will reimburse the LTA amount based on these bills.
- Some companies maintain that employees should go on leave for a minimum period of 4 or 5 days, but no bills are required. They will be given the allotted sum in advance, typically in the form of a simple voucher for having spent the money towards LTA.
- Some companies say that there is no need to take leave, and they will add the allotted amount to the employee every year at the end of the financial year. However, this amount may be taxable.

I do not know what kind of policy your company has. I advise you to go to HR and discuss this issue to gain more clarity.

Regards,
Venkat
[Phone Number Removed For Privacy Reasons]