Who doesn’t like to travel, especially when travelling could be fruitful? One of the many facilities that employees enjoy in India are the Leave Travel Concession (LTC) and Leave Travel Allowance (LTA). Using your LTA effectively could actually help you save up on a lot of money.
Leave Travel Allowance is basically the cost of travel that is granted to an employee to travel in India. LTA exemption can be claimed by an employee where the employer provides LTA to employee for a leave to anywhere in India, while on a leave. This cost of travel includes only the cost of travel. The mode of travel could be by air, by rail or any other means of transport with certain regulations. The amount of exemption varies according to the mode of transport.
It is important to clearly understand what qualifies as the amount available for exemption. If one is travelling by air, the exemption available is the economy fare on the national carrier on the shortest route. If one is travelling to a destination connected by rail then the exemption allowed is the first class AC fare by train on the shortest route. For destinations that are not connected by rail, an exemption of first class or deluxe class fare on a recognized public transport can be availed.
If you travel by car then LTA is permitted only if the car is owned by a central government organisation, the local body or the state government. If you resort to private transport options like renting a car, you could simply get a bill issued from the rental company. If the bill is not accepted by your employer you could file and income tax return and get a refund by claiming an exemption.
Family members directly dependent on the assessee can also avail the exemption. By family it means Spouse and children as well as parents and siblings directly dependent on the assessee. Exemption is not available for two or more children of an individual born after October 01, 1998. For children born before this date there is no such restriction, the term child also includes step children and adopted children of an individual. If your spouse is also granted LTA allowance, you could both claim the LTA allowance independently from your respective companies. If say in a given holiday you travel allowance have been more than the LTA allowance granted to you by your company, your spouse could get a ticket for the remaining amount from their company.
If you switch your job you could get LTA not only from your present employer but also the unutilized LTA concession from your former employer. The Travel expenses more than the LTA allowance granted to you will be subject to Tax deduction.
Every individual is entitled to this LTA twice in a period of 4 years. The exemption allowed is either the LTA that an individual is entitled to or the amount incurred during the travel that is eligible for exemption, whichever is the lesser of the two amounts. Leave Travel Allowance is allowed to your hometown once in a block of two years. The LTA is a great way to get an exemption from the hefty TDS that eats up half your salary.
The LTA is granted twice in a period of 4 years. These four years are called a block of four years for the reference of people applying for LTA. The Current block is 2010- 2013. If one does not use their LTA in the present block, they could carry forward their LTA to the first year of the next block, while making use of the next 2 LTA allowance in the last 3 years of the next block. The LTA allowance can be claimed just once every year. You cannot make a claim for two LTA allowance in one year.
While claiming the LTA it is important that the assessee has all the documents of the amount spent to allow exemption. Mere certificate that is received from the employee of the amount spent is not enough to claim an exemption. The proof of travel that should be documented includes the tickets, boarding passes, and the likes. If the booking is done through a travel agent it is important to also document the invoice of the Travel Agent. Such documents come handy during the audit of the tax return of the individual.
The employee does not necessarily have to submit his travel bills to his employer. Sometimes employers insist on having a copy of the travel bills of the employee, but it is the employees call. If one forgets to claim LTA and the employer has deducted tax on the amount paid, this money can be claimed in the income tax return and the tax that was previously deducted could be refunded back.
It is also important to note that you are eligible for exemption if you are travelling with your family. Also only the to and fro cost of travelling is only eligible for exemption. Other expenses like food, boarding, lodging, conveyance charges do not qualify for exemption. The Other Home, would help you find a Vacation Rental, Homestay or an Outdoor Adventure properties so that you could make the best of your vacation having an added benefit of having an LTA offer as well as a getting a customized vacation rental or homestay according to your preferences. Choose from numerous vacation rental or homestay options in the breath taking scenic locations like Goa,Himachal Pradesh, Karnataka, Kerala, Punjab and Uttarakhand.
After the elimination of the Fringe Benefit Tax that was more beneficial to an employee, Employees are now extensively trying to use the LTA as much as possible. Travel agencies are also banking on such schemes to make the best and reliable packages that could attract a lot of customers.
LTA packages are now available in all parts of India. With such attractive offers, all the tourist destinations being covered under the LTA, as well as the TDS saved on your salary, using LTA effectively could prove to be very fruitful to an employee. It is important to plan your trip smartly and make use of your LTA allowance in the best possible way.
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