Dear Mr. Kumar,
Basically, LTA is given so that the employee & his family can just relax a bit for few days. However, if you do not want to go anywhere and so does your family, you may adopt the following procedure, as told by one of my friends:
a) Take Train tickets (A/C or Non A/C will depend on your grade in present company as per the HR Policy) for any location in India (longer distance is better as the train tickets cost will be higher).
b) Take photo-copies of the same and preserve them with you.
c) Cancel the original train tickets etc and get the refund from Railway.
d) However, you will have to go on leave for those many number of days. For the simple reason, that you cannot get LTA and Leave Encashment (for that period) together. Because this will be like Double Taxation system.
e) So far as hotel bookings etc are concerned, that may not be an issue at all.
I personally have never done this, nor do I intend to do all this. You are requested to think about this & only then go ahead.
Regards,
Shaunak Marulkar
Jr. Manager - HR & Administration