Make sure to keep all your travel bills handy before claiming Leave Travel Allowance. Here’s how to make the most of it. Read on.
During the end of each financial year, employees coming under the taxable limits specified by the Income Tax Department get busy to find out ways to minimise the amount they need to pay to the Government as a tax. LTA or Leave Travel Allowance stands for a type of tax exemption that most of the employees get from their employer.
Do you get the same but not sure on how to claim this exemption? Here are a few basic things you need to know.
Provisions Relating To LTA
Section 10 (5) of the Income Tax Act 1961 deals with LTA and also specifies the conditions relating to it. Read the provisions in detail for any case-specific clarifications. LTA can be claimed only if you have taken leave from your job for travel purposes.
Proof Of Travel
Tax authorities do not always need proof of travel to exempt LTA, but employers will ask for a proof in most cases to either reimburse that amount or give you an exemption, depending on how your salary is structure. Always keep travel documents like a boarding pass, flight tickets, duty pass or other similar papers to prove the travel, and try to make sure they correspond with your leave dates.
What Is Covered Under LTA
LTA basically covers the expenses incurred by the employee for his own and family member’s travel. Spouse, parents, siblings and children are considered to be family members as far as the provisions relating to LTA are concerned. Travel cost incurred by the employee to book tickets for any other relatives will not qualify for exemption under LTA provisions.
It is also important to note that the costs incurred during the entire trip, which includes food, shopping and other expenses are not covered under tax exemption. The exemption is also not available for more than two children of an individual born post October 1, 1998.
If an employee books air tickets for the travel then his/her ticket cost should be equal to or lower than the limit allotted for LTA.
What Type Of Travel Is Considered Under LTA
LTA is only for domestic travels and does not cover international trips. LTA can be claimed by both the husband and wife in case both of them are working and the employer offers Leave Travel Concession. However, both of them cannot claim LTA for the same trip. Similarly, LTA cannot be claimed for the travel of only family members if the claimant is not travelling along.
You should check your pay structure before you plan to claim LTA as it is not a common part of the salary structure. It varies for one employee to the other. In case you are eligible for an LTA, you will be required to produce proof for your travel according to the criteria. You would be given a form to be filled along with travel documents like tickets, boarding passes and submitted to the relevant department once a date is announced for the same. This needs to be done before the final calculation for tax liability is done by the employer.
How To Claim LTA For A Multi-destination Journey
You need not worry if you are planning a multi-destination journey with your family. To claim LTA, travel need not be from one destination to the other. If you visit multiple places one after the other, LTA can be claimed for the journey from the place of origin to the farthest point you travel to by the shortest route. Just make sure to keep all travel proofs handy.
Making Journeys In A Block
LTA is provided for two travels made in one block. If you claim only one LTA in a block then the remaining LTA can be carried forward. However, it has to be claimed in the first year of the next block. Hence, in one block an employee can claim a maximum of three LTAs.
LTA forms an integral part of our salary structure as the concession is provided by the government to encourage employees to travel. So plan your travel well and spend some quality time with your family and enjoy your vacation well.