Understanding Leave Travel Allowance vs. Leave Travel Concession: What's the Real Benefit for Employees?

1. What is the difference between Leave Travel Allowance (LTA) and Leave Travel Concession (LTC)?

Some companies include LTA as part of their CTC structure. What is the benefit of this allowance for employees?

Understanding LTA, LTC, and LFC

LTA (Leave Travel Allowance), LTC (Leave Travel Concession), and LFC (Leave Fare Concession) are types of allowances provided by employers. There is no difference between LTA and LTC; however, LTA is paid as an allowance, while LTC is a concession paid by the employer for a journey undertaken as a pleasure trip with dependents. The benefit for employees is that they can avail of fare charges incurred during the journey, which will be reimbursed by the employer.

For employees, the benefit of LTA is that, upon submission of the travel tickets, the LTA allowance is exempt from tax, allowing employees to save on taxes. CTC has various components that benefit employees by minimizing the tax paid to the government. For example, HRA and mobile or other reimbursements.

LTA Exemption Conditions

Thus, LTA is a component that can be exempted from tax provided the employee actually travels and submits the bills. There are a few points to be noticed:

- Organizations would validate the leave tracker and the travel tickets that you submit to avoid any duplication of bills.
- Travel should be domestic, and international travels are not covered under LTA.
- Only travel fares can be claimed; food and other expenses are not part of LTA.
- LTA comes in blocks, once in 4 years.
- If an employee has not traveled and hasn't submitted the travel tickets, this LTA allowance is subject to income tax, and the tax will be deducted per the employee's tax slab.

Not a good benefit though, as not every employee will travel, and also the block limitations don't seem a great choice for every year.

Regards, Thiyagu