What is Leave Travel Allowance or LTA?

Posted on Posted in Income Tax, Work

What is Leave Travel Allowance or LTA?

LTA is an allowance which is usually given by an employer to the employee when that particular employee takes leave from work and goes on for some travel. LTA is an acronym for Leave Travel Allowance that can be used in a company to give it to the employees. This LTA is used especially for companies but it is not applicable for the businessman or other self-employed people. Incase of business people, they cannot get paid LTA themselves. Instead of LTA, they call it as LTC (Leave Travel Concession).

leave-travel-allowance-10-things-you-must-know

About Leave Travel Allowance (LTA)

In general, the employers give Leave Travel Allowance to their employees at various companies for some reason. LTA is considered as a chunk of Cost to Company (CTC) and it is regarded as a distinct part of the employee’s pay package for the purpose of tax planning. This way, the amount will turn out to become tax free in the hands of employees. In case of the Government organizations, the LTA will be an exception.If you wish to get an exemption from tax on LTA, the employee must state the total only two times in a period of four years. This is the actual reason behind providing Leave Travel Allowance for the employees by the employers.

Why must a Company Give LTA to the Employee?

Based on the choice of the employer of the company, they will provide LTA to the employees in their salary. It is completely based on the mode of salary planned to the employee. In some situations, the company itself provides an option for the employee to go for LTA in their salary so as to make payment of various bills. In some other cases, the company provides an option of giving a fixed amount of LTA but tax will be levied on that particular amount.

Benefits of LTA for Employees

There are numerous benefits or advantages for the employees when they get LTA. If an employee gets LTA, then it would save some tax for the employee. For instance, if the yearly salary of the employee is 10, 00, 000 and it comprises Rs. 20, 000 LTA part. After deducting some amount for various bills such as house rent, medical bills and other tax savings, the amount of tax for which the employee needs to pay the tax is for Rs. 8, 00, 000. If in case, the employee claims LTA in that particular financial year, then the taxable income will be lessened to Rs. 7, 75, 000. This way the LTA part present in your salary turns out to become free from your main tax amount. In the LTA, the whole cost of the leave or holiday will not be included. The travel costs to go to that particular place are only included. Besides this, the cost of accommodation, food and other expenses will not be added.

lta

IS there a need to Travel for Acquiring LTA?

If you are looking to claim Leave Travel Allowance then, you will have the following options:

  • You can either travel single or go out with your family members.
  • The family includes your children, parents, wife or husband, brothers, sisters and others who are the part of a family.
  • The tax exemption is applicable for a limit of only 2 children i.e., for the children who are born after 1st October, 1998.
  • If you do not travel and only send your family then, you must not claim an LTA for that journey. This is because; the family can travel on LTA only with the employee who is eligible for LTA.

Can you go abroad?

In order to acquire LTA, the employee needs to take a leave and travel to any location in the country India. Travelling other countries except India is not acceptable. Apparently, the employees are not allowed to claim LTA for the days when they are working and for some other general holidays like Sunday.

Limit for Number of Leaves

According to the Income-tax Act, there is no limit on taking the minimum number of leaves. But, the company might fix a limit on your leaves. The LTA will be applicable for the journey which is made by road, train, and airways in India. In order to get the advantage of LTA, the employee needs to travel in the shortest way possible.

How to make a claim for LTA?

In order to claim for Leave Travel Allowance, the employee needs to write provide a written declaration to the employer of a particular company by including all the details regarding the travel and the total amount spent for the travel. As per the order from the Supreme Court, the employee need not submit all the actual bills instead they can simply submit the declaration form. It is often recommended for the employees to safeguard all the bills of tickets for future reference.

Leave a Reply

Your email address will not be published. Required fields are marked *