Introduction
For salaried employees in India, Leave Travel Allowance (LTA) is an excellent way to save taxes while enjoying a vacation. However, many employees either don’t utilize LTA or fail to claim tax exemptions properly, resulting in unnecessary tax liability.
If you’re a salaried individual planning to travel and want to claim LTA, this guide will help you understand what LTA is, who can claim it, eligible expenses, tax exemptions, and the step-by-step claim process.
What is Leave Travel Allowance (LTA)?
LTA is a tax-free allowance provided by employers to help employees cover their travel expenses when they take leave. This exemption is governed by Section 10(5) of the Income Tax Act, 1961 and is available only for domestic travel within India.
Many companies include LTA as a part of the Cost-to-Company (CTC) structure, which means employees must submit valid travel expenses to claim this exemption. If not claimed, the amount is fully taxable.
Who is Eligible to Claim LTA?
To avail of LTA tax benefits, you must meet the following conditions:
Salaried employee whose employer offers LTA in the salary package.
Must travel within India while on paid leave.
Can claim for self, spouse, children, and dependent parents or siblings.
Cannot claim if travel is international (foreign trips are not covered).
Points to Note:
- Only two children per employee are eligible for LTA claims (for children born after October 1, 1998).
- If your employer doesn’t provide LTA, you cannot claim it as a tax deduction while filing ITR.
What Expenses Can Be Claimed Under LTA?
LTA covers only travel expenses. Here’s a list of expenses that are eligible for exemption:
Airfare – Economy class tickets for domestic travel.
Train Fare – First-class AC or any lower class.
Bus Fare – If traveling via public transport (State/Govt. bus services).
Expenses NOT Covered Under LTA:
Hotel stay and accommodation charges.
Food, beverages, and entertainment expenses.
Local transport, sightseeing, or taxi charges.
LTA Tax Exemption Rules
The Income Tax Act allows LTA claims twice in a block of four years.
Current Block: 2022 – 2025
If you do not claim LTA in a block, you can carry forward one unclaimed LTA to the next block.
Other Important Rules:
- The tax exemption is available only for the shortest route between the origin and the destination.
- Self-travel is mandatory – If the employee does not travel, LTA cannot be claimed.
- The journey should be undertaken during the employment period.
How to Claim LTA?
Follow these steps to claim LTA:
Step 1: Plan Your Travel
Make sure your trip falls within the eligible period and is conducted within India.
Step 2: Keep Proof of Travel Expenses
Maintain original travel receipts such as:
Flight tickets & boarding passes.
Train tickets with PNR details.
Bus tickets (Government or Recognized transport).
Step 3: Submit LTA Claim to Employer
- Submit proof of travel expenses to your employer before the deadline.
- Most employers have a time limit for LTA claims (usually within the financial year).
Step 4: Verify LTA Exemption in Form 16
Once processed, check your Form 16 to ensure that the exemption has been applied correctly.
If your employer does not process your LTA claim, you will have to pay tax on it while filing ITR.
Example of LTA Calculation
Let’s assume you are a salaried employee who traveled from Bangalore to Delhi with your family and spent:
- Flight ticket per person: ₹10,000
- Total family members: 4
- Total cost of travel: ₹40,000
If your employer provides LTA of ₹30,000, you can claim ₹30,000 tax-free, while the remaining ₹10,000 will be taxable as part of your salary.
Can You Claim LTA While Filing ITR?
No. LTA exemption can only be availed through the employer and cannot be claimed separately in the Income Tax Return (ITR).
If your employer has not granted you an LTA exemption, you must pay tax on the LTA component while filing ITR.
LTA vs. LTC Cash Voucher Scheme (For Employees Who Didn’t Travel)
During the pandemic, the government introduced the LTC Cash Voucher Scheme for employees who could not travel but wanted to claim LTA.
Employees had to purchase goods/services attracting 12% or more GST to avail tax exemption.
This scheme was only valid till March 31, 2021, and does not apply anymore.
Common Mistakes to Avoid While Claiming LTA
1. Not Keeping Travel Receipts – Always keep your tickets, boarding passes, and invoices as proof.
2. Assuming Any Travel Expense is Covered – Only transport costs are covered, NOT hotel, food, or sightseeing.
3. Claiming for More Than Two Journeys in a Block – LTA is allowed only twice per block.
4. Failing to Submit Documents on Time – Employers have a deadline for LTA claims; missing it means losing the tax benefit.
Conclusion
LTA is an excellent tax-saving benefit for salaried employees, but many people fail to claim it properly. To make the most of LTA:
Plan your travel within India.
Keep all travel proofs and submit them on time.
Understand the LTA block system and claim twice per block.
By being aware of these rules, you can ensure that your LTA claims are processed smoothly and avoid unnecessary tax deductions on your salary.
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