Navigating LTA Benefits: Seeking Guidance on Limits, Reimbursements, and Policies

Dear All Seniors,

I am working with a small IT firm, and we would like to introduce LTA benefits to our employees. For this, I need the seniors' help.

Understanding LTA Benefits

May I know what the minimum and maximum limits are for LTA, and how one can reimburse it? What should be the ideal policy for that?

If I am not mistaken, one can reimburse it twice in a four-year duration, and it should be applicable to travel within India only, correct? It does not include hotel stays and food expenses.

Reimbursement for Family

Can we reimburse the travel expenses of the spouse and child? If yes, is the LTA limit the same?

Eligibility Criteria

Only those employees who have completed one year in the current company can take LTA benefits, is that correct?

Thank you to all my seniors in advance for transferring your knowledge to juniors like us!

Regards

Understanding Leave Travel Allowance (LTA) for Salaried Employees

Leave Travel Allowance affects every salaried employee. Here are some key points to understand:

1. Tax exemption on LTA can only be claimed if you have applied for leave from your company for travel and if you actually make a journey.

2. LTA covers only the cost of travel for the trip. Hotel accommodation, food, etc., cannot be claimed for exemption.

3. LTA exemption covers you and your family. A family, under LTA, includes a spouse, parents, siblings, and children. The cost of other relatives cannot be claimed.

4. LTA can be claimed twice in a block. The blocks are decided by the government. They are 2010-2013, 2014-2017, and so on.

5. LTA can be claimed for travel through rail, air, or any other public transport. However, you should keep proof of travel handy as it may be needed by your employer.

6. LTA covers only domestic travel.

7. LTA exemption is limited to the amount of LTA paid to the employee as part of the CTC. One cannot claim exemption beyond the actual LTA amount being provided.

8. Both spouses can claim the exemption on LTA from their employers. However, both of them cannot claim for the same journey.

9. In case you have only claimed LTA for one journey in a block, you can make another journey in the first year of the next block and claim it. In such a case, 3 journeys can be claimed for the block in total.

10. LTA cannot be claimed for the family if you, as a claiming person, are not included in the travel.

Regards,

There is no such limit. Ideally, all traveling expenses, including taxi fare from residence to the airport or railway station and back, can be reimbursed. It can be reimbursed every year; however, income tax benefits will be available only for 2 years in a block of 4 years (IT Block 2013 to 2016). It can be outside India as well. No reimbursement of hotel and food expenses is permissible.

Reimbursement can be for the employee and his declared family, which includes one spouse and legal children. Yes, normally LTA benefit is granted only after one year's continuous service with the employer.

Are you sure that we can reimburse the LTA for travel outside of India as well?

Travel Reimbursement and LTA Policy Clarification

There is no such limit. Ideally, all traveling expenses, including taxi fare from residence to Airport/Railway Station and back, can be reimbursed. It can be reimbursed every year; however, Income Tax benefits will be available only for 2 years in a block of 4 years (IT Block 2013 to 2016). It can be outside India as well. No reimbursement of hotel & food expenses is permissible. Reimbursement can be for the employee and his declared family, which includes one spouse and legal children.

Yes, normally, LTA benefit is granted only after one year's continuous service with the employer.

Can you explain which LTA policy states that we can claim international travel? LTA can be claimed for travel through rail, air, or any other public transport. However, you should keep proof of travel handy as it may be needed by your employer. LTA covers only domestic travel.

10 Most Commonly Asked Questions on LTA

1. When can we claim LTA?

Tax exemption on LTA can only be claimed if you have applied for leave from your company for travel and if you actually make a journey.

2. What does LTA cover?

LTA covers only the cost of travel for the trip. Hotel accommodation, food, etc., cannot be claimed for exemption.

3. Whom does it cover?

LTA exemption covers you and your family. A family under LTA includes a spouse, parents, siblings, and children. The cost of other relatives cannot be claimed.

4. How many times can we claim LTA?

LTA can be claimed twice in a block. The blocks are decided by the government. They are 2010-2013, 2014-2017, and so on.

5. What type of transport does LTA cover?

LTA can be claimed for travel through rail, air, or any other public transport. However, you should keep handy the proof of travel as it may be needed by your employer.

6. Is international travel permitted?

No, LTA covers only domestic travel.

7. What is the maximum limit on LTA exemption?

LTA exemption is limited to the amount of LTA paid to the employee as part of the CTC. One cannot claim exemption beyond the actual LTA amount being provided.

8. Can a husband-wife duo claim LTA?

Yes, both spouses can claim the exemption on LTA from their employers. However, both of them cannot claim for the same journey.

9. Can we carry forward LTA?

Yes. In case you have only claimed LTA for one journey in a block, you can make another journey in the first year of the next block and claim it. In such a case, 3 journeys can be claimed for the block in total.

10. Can LTA be claimed if the actual claiming person has not traveled?

No, LTA cannot be claimed for the family if you, as a claiming person, are not included in the travel.

Conclusion

LTA exemption is available for the shortest route traveled and can be availed only for travel on working days. You can also claim LTA while filing your taxes. Proofs are not needed by the I-T department initially, but it is always better to keep them handy.

Tax Benefits on LTA for Domestic Tourism

The Government of India has allowed tax benefits on Leave Travel Allowance (LTA) to promote domestic tourism, but not for international tourism.

Regards,
Pon

Thank you for your valuable suggestion, but I still have the same query. Ideally, what should be the limit for LTA to claim, or on what basis does the employer decide the LTA amount?

Hello, thanks for your valuable suggestion, but I still have the same query. Ideally, what should be the limit for LTA to claim, or on what basis does the employer decide the LTA amount?

LTA Limit and Tax Exemption

No specific limit is set by the IT department regarding LTA and its tax exemption. Tax exemption is allowed on the actual cost of the tour or the LTA amount fixed by the employer, whichever is less. It is up to the employer to decide the ceiling of LTA.

Regards,
Pon

Pon has aptly replied; there is no specific limit from the IT department. It is purely at the employer's discretion based on the designation you hold and the salary breakup they want to provide. You can consider it as part of the CTC from the employer's side and as a tool for IT exemption.