As far as my knowledge goes, there is no specific limit to the payment of LTA. It is just a matter of your company's decision or salary breakup. However, LTA is exempt while calculating income tax, only to the extent of the "minimum of the following":
1. Amount of expenses actually incurred by the employee for LTA (for travel - only air or rail fare, not any other expenses like boarding and lodging) or
2. The amount of LTA received by the employee.
However, there are various provisions in the IT Act regarding this matter. A few are mentioned for your immediate reference:
- LTA can be claimed for only 2 journeys in a period of 4 calendar years (called the block - the current block is 2006-2009).
- The employee should provide the tickets and boarding passes as proof of the journey to the employer, and the employer has to retain them.
For further information, you should consult an Income Tax Ready Reckoner.
Regards,
MS