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Claiming deduction on Leave travel assistance (LTA) amount

This outlines some conditions you need to meet to get this deduction

Leave travel assistance (LTA) is an important component of an employee's salary. The LTA amount is received from the employer for undertaking a travel. LTA is eligible for deduction under the Income Tax Act subject to compliance with specified conditions.

According to the provisions of Section 10 of the Income Tax Act, in the case of an individual, any travel concession or assistance received is exempt if it is received from his employer, for himself and his family, in connection with his proceeding on leave to any place in India. It is also exempt if it is received from his employer for himself and his family, for travel to any place in India after his retirement or termination of service. The amount exempt cannot exceed the amount of expenses actually incurred on the travel.

The amount exempted under Section 10 should be the amount actually incurred on the travel. The journey should be in India only. The exemption is available for the farthest place by the shortest route when a circular journey is undertaken.

In order to claim the exemption, an assessee must produce original proofs of expenses - tickets etc. The tax benefit is for actual fare only. Hotel, food, sight seeing, local conveyance etc are not allowed.

The exemption is available to an individual for two journeys performed in a block of four calendar years commencing from the calendar year 1986. The current block is calendar year (January to December) 2006 to 2009. Any fixed sum paid by the employer to an employee as LTA, on the basis of a self declaration made by the employee, is not exempt from tax. Where a travel concession or assistance is not availed of by an individual during any such block of four calendar years, it may be carried forward. The travel concession or assistance amount can be availed of by an individual during the first calendar year of the immediately succeeding block of four calendar years, and it will be eligible for exemption.

Some points to be noted for exemption:

  • Fare amount: If the journey is by air, the air economy fare of the national carrier by the shortest route to the destination is the amount allowed for deduction.

  • If train connection exists: If the place of origin of journey and destination are connected by rail, but the journey is undertaken by any other mode of transport, other than by air, the air conditioned first class rail fare by the shortest route to the place of destination is the amount allowed.

  • When no train connection exists: If the place of origin of journey and destination are not connected by rail, the amount eligible for exemption is the first class or deluxe class fare of any transport by the shortest route to the destination.

  • Where no public transport exists: Here, the air conditioned first class rail fare, by the shortest route, is considered.

Defining family

For the purposes of this clause, 'family' means the spouse and children of the individual; the parents, brothers and sisters of the individual; or any of them dependent on the individual. The exemption is available for a maximum of two children of an individual.

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