Is It Fair for My Company to Withhold LTA Without Travel Bills? Seeking Clarification

LTA is a part of my salary (CTC) in my current employment with a private firm in Raipur. I have not claimed any tax exemption and paid taxes (TDS) on my LTA amount in the financial year 2014-15, as I had not gone for any travel throughout the year. The finance department of the company demands travel bills for payment of LTA as a part of my CTC in salary; otherwise, they will not pay it at all. Please clarify, is LTA not payable to employees without travel bills in this situation?

Hi,

If you submit travel bills to the Finance department, they will provide you with a tax benefit as part of your salary package. If you do not submit any bills, then it should be considered fully taxable. They have already released your salary so they cannot ask you for payment.

The current block is running from January 1, 2014, to December 31, 2017. During this period, you can claim LTA twice for tax exemption. Please clarify any misunderstandings with your finance department.

Thank you.

Ashish has rightly suggested that, in addition, as per the Supreme Court's ruling, documentary evidence is not required to claim LTA.

Understanding Leave Travel Allowance (LTA)

Leave Travel Allowance (LTA) is a common element of compensation adopted by employers to remunerate employees, considering the tax benefits attached to the allowance. LTA is the reimbursement paid by the employer for the travel of the employee within the country when he/she is on leave and traveling with family or alone.

Current LTA Block

The current block of four years for LTA is 2014-17.

LTA Coverage

LTA is only for traveling fare. Suppose you spend Rs 20,000 on a holiday, including stay, etc., but Rs 15,000 is the travel expense. Your reimbursement will be Rs 15,000 only.

Legal Rulings and Requirements

The Honorable Supreme Court, in the case of Larsen and Toubro and ITI, has ruled that the employer is not under any statutory obligation to collect travel bills as proof of travel expenses. However, remember that the assessing IT officer is within his rights to ask for documentary evidence while scrutinizing your IT return. The IT circular of 2013, asking employers to retain documentary evidence of travel, seems to have overlooked the Honorable SC ruling.

Recommendation

I would advise the preservation of travel tickets for the amount claimed as LTA as a precaution to avoid any subsequent IT queries.

If it is part of CTC, you should get it, but fully taxable if not undertaken travel.

Pon

LTA: Evidence of Expenses

Employers, while processing the conveyance and leave & travel allowance (LTA) claims of their staff, are under no statutory obligation to collect supporting evidence and furnish them to tax authorities, the Supreme Court said on Jan 21, 2009. A bench comprising Justice S.H. Kapadia and Justice Aftab Alam stated that assessee employers are under no statutory obligation to collect bills and details to prove that the employees had utilized the amounts obtained against these claims on travel and related expenses.

Case Details

CIVIL APPEAL NO.993 OF 2005 / WITH NO. 992 OF 2005 COMMISSIONER OF INCOME TAX & ANR. V/s LARSEN & TOUBRO LTD

Order: A short question which arises for determination in these Civil Appeal(s) is whether the assessee(s) was under statutory obligation under the Income Tax Act, 1961, and/or the Rules to collect evidence to show that its employee(s) had actually utilized the amount(s) paid towards Leave Travel Concession(s)/Conveyance Allowance. It may be noted that the beneficiary of exemption under Section 10(5) is an individual employee. There is no circular of the Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the Declaration to be submitted by an employee(s). For the above reasons, there is no merit in the Civil Appeals, and the same are dismissed with no order as to costs.

Regards

Hi,

If LTA is part of CTC, I should get it fully taxable. How should it be shown on the salary slip?