Tax Exemption on Leave Travel Allowance (LTA) – Part II
In an earlier post we looked at the conditions governing tax exemption on leave travel allowance (LTA). In this post we will look at the calculation of the tax exemption amount. As mentioned in the earlier post, the exemption is available only on travel expenses (ticket fare etc.) incurred by the employee on leave travel. Expenses on local conveyance, boarding, lodging, sightseeing etc. cannot be considered.
Many people mistakenly believe that whatever is spent on leave travel towards ticket fare, taxi fare etc. can be considered in full for tax exemption. There are several conditions — as laid down by Section 10(5) of the Income Tax Act and Rule 2B of the Income Tax Rules — which govern calculation of the actual tax exemption. Let us see how one can calculate the tax exemption if an employee submits details of the travel expenses to the employer.
The two critical determinants of tax exemption on LTA are the mode of travel and the places visited by the employee.
Mode of travel determines extent of tax exemption
Whatever be the mode of transport (train, air, ship etc.) used by the employee, the extent of tax exemption is determined as per the following rules.
|
S. No |
Journey performed by |
Exemption Limit |
|
1. |
Air |
Economy Air fare of the national carrier (Air India) by the shortest route to the place of destination. |
|
2. |
Any mode (bus, train, ship, taxi etc.) other than air to places which are connected by rail. |
First Class Air conditioned rail fare by the shortest route to the place of destination. |
|
3. |
Any mode (bus, train, ship, taxi etc.) other than air to places which are not connected by rail. |
a) Where public transport system exists, first class or deluxe class fare on such transport by the shortest route to the place of destination. b) Where no public transport system exists, first class A/C rail fare, for the distance of the journey by the shortest route, as if the journey has been performed by rail. |
Table 1
The Income Tax Act and Rules refer to travel from one place (origin) to another (destination). While there is no explicit reference to the return journey in tax law, it may be assumed that the term “journey” for the purpose of determining tax exemption on LTA includes both “To” and “Fro” journeys.
In case an employee travels to many places, calculation of tax exemption gets somewhat complex. We will see how to calculate tax exemption when an employee visits more than one place later. Let us first look at some illustrations when an employee travels from one place to another and gets back.
Leave travel to a single destination
If an employee travels by air from one place to another and gets back, the exemption shall be the actual air fare expenses incurred by the employee or the economy air fare in an Air India flight for the same places, whichever is lesser.
Illustration 1
An employee travels by air from Chennai to Mumbai (and back) by business class and incurs Rs 50,000 towards air ticket fare. The return economy air fare from Chennai to Mumbai costs Rs 13,000 by Air India flight. The company reimburses Rs 50,000 towards LTA. What is the tax exemption available to the employee?
Ans: Since the economy air fare is lesser than the actual fare expense incurred by the employee, the tax exemption shall be limited to Rs 13,000. The LTA amount to the extent of Rs 37,000 will be taxable.
If an employee (and his family) travels by train or any other mode (other than air) from one place to another and back (the places are connected by train), the exemption shall be the actual train fare/ticket/travel expenses incurred by the employee or the First A/C train fare (if the employee had made the trip by train), whichever is lesser.
Illustration 2
An employee travels from Chennai to Hyderabad by taxi and incurs Rs 30,000 towards taxi fare. The First A/C train fare for Chennai to Hyderabad costs Rs 2,000. The company reimburses Rs 30,000 towards LTA. What is the tax exemption available to the employee?
Ans: Since the First A/C fare is lesser than the actual fare expense incurred by the employee, the tax exemption shall be limited to Rs 2,000. The LTA amount to the extent of Rs 28,000 will be taxable.
Illustration 3
An employee and his family travel by train from Chennai to Hyderabad by second A/C and incur Rs 13,000 towards train fare. The First A/C train fare for Chennai to Hyderabad for the employee and his family costs Rs 16,000. What is the tax exemption available to the employee?
Ans: Since actual fare expense incurred by the employee is less than the First A/C fare, the tax exemption shall be limited to Rs 13,000.
Illustration 4
An employee and his family travel by taxi from Place A to Place B which are not connected by train and incur Rs 6,500 towards taxi fare. How should the tax exemption be calculated?
Ans:
– If there is public transport facility (say, bus) available for travel between Place A and Place B:
The tax exemption amount shall be Rs 6,500 or the first class/deluxe fare by way of the public transport, whichever is lesser.
– If there is no public transport facility available for travel between Place A and Place B:
The tax exemption amount shall be Rs 6,500 or the First A/C train fare for travel between 2 other places of the same distance as from Place A to Place B.
Leave travel to multiple destinations
Calculation of tax exemption gets complex when an employee travels to multiple places as part of leave travel. In addition, employees may use multiple modes of transport to complete their leave travel. This makes calculation even more difficult.
If an employee travels to more than one destination, the basis of calculating tax exemption shall be as follows:
Where the journey is performed in a circuitous route, the exemption is limited to what is
admissible by the shortest route. Likewise, where the journey is performed in a circular
form touching different places, the exemption is limited to what is admissible for the
journey from the place of origin to the farthest point reached in India, by the shortest route.
Since the law provides for calculation of tax exemption on travel expenses between only 2 places, the employer should determine the farthest place (travelled to by the employee) from the place of origin and specify the same as the travel destination. Further, the employer should determine the shortest route from the place of origin to the place of destination. For the shortest route, the employer should apply the rule related to mode of travel (as stated in Table 1) and determine the tax exemption.
Illustration 5
An employee travels from Chennai to Hyderabad via Bangalore by Third A/C compartment and spent money on ticket fare as follows.
- “To” journey: Chennai – Bangalore: Rs. 900——————————-Bangalore – Hyderabad: Rs 1,200
- “Fro” journey: Hyderabad – Bangalore: Rs. 1,200 ————————Bangalore – Chennai: Rs 900
All told, the employee spent Rs 4,200 on leave travel. What is the tax exemption?
Ans: Step 1: Since the employee travelled to multiple destinations (Bangalore and Hyderabad), the employer needs to determine the farthest place from Chennai (place of origin). The farthest place from Chennai is Hyderabad.
Step 2: Since the mode of travel is train and travel by the shortest route from Chennai to Hyderabad would involve taking a direct train from Chennai to Hyderabad, the employer needs to calculate the First A/C fare from Chennai to Hyderabad and back.
First A/C train fare: Chennai to Hyderabad and back: Rs 4,500.
Since the total train fare expense incurred by the employee is less than the first A/C train fare of Rs 4,500, the tax exemption is Rs 4,200.
Leave travel to multiple destinations by multiple modes of transport
This is when the calculation of tax exemption gets really difficult. When an employee travels to many places, the employer needs to determine the farthest place (from the place of origin) and calculate the shortest distance. This is the easy part.
However, the law is not clear as to which mode of transport should be considered for the purpose of calculating tax exemption when an employee uses more than one mode of transport. Given that air fare (economy class) and train fare (First A/C) are prescribed as the benchmark by tax law, if an employee travels by both air and train during leave travel, which benchmark (air or train fare) should be considered for the purpose of calculating tax exemption?
There are only 2 benchmark modes of transport (air fare if the travel is by air and train fare if the travel is by any other mode) prescribed by the income tax department for the purpose of exemption calculation. We are of the view that if an employee uses both air and train, employers should use the train fare as the benchmark for calculating tax exemption since this case would fall under “other mode” of transport. Unless an employee travels by air to all destinations during his leave travel, air fare should not be considered as the benchmark.
Illustration 6
An employee’s leave travel is as follows:
- First leg: Chennai to Mumbai – Air travel
- Second leg: Mumbai to Delhi – Train travel
- Final leg: Delhi to Chennai – Taxi travel
How should the tax exemption be calculated?
Ans:
Step 1 – Determine the farthest place and label it as the destination.
Since Delhi is the farthest place from Chennai, Delhi shall be the destination.
Step 2 – Determine the mode of travel
While the employee travelled by air from Chennai to Mumbai, he travelled by train and taxi to other places. Hence, train shall be considered as the mode of transport for the purpose of tax exemption calculation. It may be noted that all the places the employee travelled to are connected by train in this example.
Step 3 – Calculate the tax exemption.
Since Chennai (origin) and Delhi (destination) are connected by train, consider the First A/C train fare of the train which takes the shortest route from Chennai and Delhi. Compare the train fare with the actual travel expense incurred by the employee. The amount which is lesser of the two shall be the exemption amount.
Employers should collect and scrutinize proof of leave travel
Many employers are under the impression that they need not collect proof of leave travel as per a Supreme Court judgement. According to the judgement:
There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the Declaration to be submitted by an employee(s).
However, in the TDS circular issued in the recent past, the Income Tax Department has specified that employers need to collect and scrutinize the proof of travel (ticket etc.) before granting tax exemption. The relevant excerpt from the Income Tax Department circular is as follows.
Obligation of the employer –The employer has to satisfy the obligation that leave travel
(fare) concession is not taxable in view of section 10(5) the employer is not only required to
be satisfied about the provisions of the said clause but also to keep and preserve evidence in
support thereof.
All employers should now collect proof of travel from employees if they wish to grant tax exemption on LTA.
Travel proof
- In case of air travel, air ticket and boarding passes.
- In case of train travel, the train ticket.
- In case of travel by taxi, the taxi bill should contain the name of the employee, details of the places visited, distance covered and date of travel.
- If an employee travels with family, the details of the family members (name, relationship and age) should be submitted to the employer. The employee should submit a declaration that his parents, brothers and sisters — whose travel expenses are to be included for tax exemption– are wholly dependent on him.
When an employee’s family includes small children and senior citizens whose travel expenses are sought /to be included and if First AC train fare is the benchmark, employers should use the corresponding train fare of children and senior citizens for the purpose of tax exemption.
Illustration 7
An employee travels with his wholly-dependent, 75 year old father on leave by taxi and incurs taxi fare. When looking at the corresponding First A/C train fare for comparison, the employer should consider the discounted train fare which a 75-year old person is entitled to for the purpose of calculating tax exemption.
Issued faced by employers
As we mentioned in our earlier post, we believe that the law governing tax exemption on LTA is complex to understand and difficult to follow. Let us take a look at the typical issues employees face while calculating tax exemption on LTA.
- When employees travel to multiple destinations, it may not be easy to determine the farthest place by compliance personnel.
For example, let us assume that an employee who works in a Chennai based company visits many places in Assam and Meghalaya on leave travel. It may not be easy for the compliance personnel sitting in Chennai to determine accurately the farthest place. Also, determining the farthest place can be arduous and time consuming if there are many employees who do circuitous leave travel. - When an employee visits places which are not connected by train, employers may find it difficult to get details regarding public transport in the areas visited by the employee in order to calculate tax exemption.
- Calculating equivalent First AC train fare can be time consuming, particularly when an employee travels with his family.
- Many employers pay LTA as a monthly fixed pay and collect travel bills for scrutiny and calculate tax exemption on LTA only towards the end of the year. If an employee travels in the early part of the year, the First A/C train fare or air fare at the time of travel may not be the same as that towards the end of the year when employers calculate tax exemption. If there is a change in train fare towards the end of the year, employers may not find it easy to locate the train/air fares which were in effect at the time of the employee’s travel.
The Income Tax Department should consider simplifying the rules governing tax exemption on LTA. Compliance officers in employer organizations currently find it difficult to meet the onerous conditions laid down in this regard. A simpler set of rules will go a long way in enhancing compliance.
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Leave a Comment (66) ↓
My company recently introduced a policy as follows, wanted to know if this is legally correct. 1. LTA can be claimed only if you gone on travel on 3 consecutive paid/earned leaves. So if I go on a leave on Fri to Monday with 2 days as weekends and 2 days of paid leave. As per policy I am not eligible to claim LTA for tax savings. 2. LTA can be claimed only on Earned Leave and not on any other leaves like Casual Leaves of Holidays. Request your help to understand the same.
You are talking about 2 things here – claiming LTA amount from your company and claiming tax exemption on LTA.
Claiming LTA:
Please note that your company is not obligated to offer LTA to its employees as per any statute. Organizations offer LTA only to help employees get tax exemption. Hence, your company can state that you can claim LTA only if you undertake leave travel on earned leave.
Claiming tax exemption on LTA:
The Income Tax Act only states that for the purpose claiming tax exemption an employee should have undertaken leave travel. The Act does not specify anything on whether the travel should have been undertaken on earned leave etc. If your company allows you to claim the LTA amount, the tax exemption rules pertaining to LTA should be looked at for the purpose of calculating tax exemption.
Hi, need a bit of advice.
Would be travelling with family in the month of Oct’14 (11th Oct- Saturday) to Amritsar from Mumbai, however, the flight I have booked would have a stopover @ Delhi (7hrs) & then Delhi to Amritsar. Would I be able to claim from Mumbai to Amritsar or would it be only Delhi? What are the rules regarding stopover flight?
Also, we wish to go to Jammu from Amritsar by road & then fly from Jammu to Mumbai. Would I be able to claim Jammu to Mumbai as the fro journey? Would it be otherwise advisable to board flight from Amritsar & claim for Mum-Amritsar- Mumbai?
Thank you in advance.
Would I be able to claim from Mumbai to Amritsar or would it be only Delhi? What are the rules regarding stopover flight?
Ans: You can claim tax exemption for Mumbai to Amritsar and Mumbai to Delhi
Also, we wish to go to Jammu from Amritsar by road & then fly from Jammu to Mumbai. Would I be able to claim Jammu to Mumbai as the fro journey? Would it be otherwise advisable to board flight from Amritsar & claim for Mum-Amritsar- Mumbai?
Ans: Yes, you can claim tax exemption for Mumbai to Jammu and back. However, you cannot use air fare for exemption since Amritsar to Jammu leg will not be by air.
Would it be otherwise advisable to board flight from Amritsar & claim for Mum-Amritsar- Mumbai?
Ans: Yes, Mum-Amr-Mumbai will entail you to use air as the mode of transport for the purpose of tax exemption calculation since you will be making the entire travel by air.
HI, I am travelling from pune to hydrabad by Jet Konnect / Jet Airways. can I claim tax exemption for this travel in LTA
Yes, you can. However, the extent of exemption will be determined by the rules governing LTA tax exemption.
Hi,
My Family travel from 30th May 2015 till 7th June 2015, where as I took leave from 3rd June till 7th June and I travel on 3rd June and return back on 7th June.
Will I am eligible for tax exception for Myself and for my family??
Please Guide.
If you do not travel along with your family, you cannot claim tax exemption on LTA. From what you have written, it looks as though you travelled along with your family only in the return journey. Hence, the travel expense of your family members only for the return journey can be considered for tax exemption.
Thanks for your reply.
1.In return also I travel through AC 1st and My Family travel through AC 2nd. Still I am eligible for Tax exemption for return Journey for Myself and my family??
2. For onward Journey I am eligible for Myself expanse only??
1.In return also I travel through AC 1st and My Family travel through AC 2nd. Still I am eligible for Tax exemption for return Journey for Myself and my family??
Ans: Yes.
2. For onward Journey I am eligible for Myself expanse only??
Ans: Yes.
Thanks Gautam for the detailed explaination with illustrations. My search for my queries ended after I read your post. Kudos.. Keep it up.
Hi,
I travelled with Family to Munnar, Kerala from Mumbai. I first travelled by Air b/w Mumbai to Cochin, then took Cab to Reach Munnar. Similarly I returned from Munnar to Cochin by Cab and then took flight to reach back Mumbai.
So in this scenario, can I claim for Air TIckets and Cab tickets both for LTA Claim?
As My Point A is Mumbai and B is Munnar, as there is no direct flight or train available, so I have to go using 2 transport method. Please suggest, so I can claim it accordingly.
From Mumbai to Munnar, please calculate the First AC train fare for the equivalent distance. If the train fare is lesser than the travel expense you incurred (flight fare and cab fare), the train fare shall be the exemption amount.
Or specify your destination as Cochin and calculate the equivalent Indian Airlines air fare for Mumbai to Cochin. If the Mumbai-Cochin air fare you incurred is less than the equivalent Indian Airlines fare, you can avail the total air fare you incurred as the exemption. In this case you cannot include the cab fare for exemption.
I work in Mumbai and my parents live in Delhi , If I go to leave say Darjeeling from Mumbai. and my parents come from delhi .
So from which location to which location , I can claim the LTA.
Can I claim for both journeys , mine from mumbai to Darjeeling and my parents from delhi to Darjeeling.
You can only consider the leave travel in which you participated. This means only your travel from Mumbai to Darjeeling can be considered.
Thanks for the detailed information provided by you.
I will be travelling from Pune to Ahmedabad by air with my family. I will then do sightseeing in and around Ahmedabad ( places like Dwarka, Somnath, etc.) by cab/taxi. Will I be able to claim complete travel cost in the LTA?
No. You can consider only the air fare for Pune to Ahmedabad for LTA exemption calculation.
Thanks Gautham for your elaborate explanation and clear answers. As somebody commented above, all queries relating to LTA exemption end here. Superb.
Hi ,
I am travelling from Bangalore to Haldwani with Parents and Wife.
To Journey-
> Bangalore to Delhi (Air) With parents and wife
> Delhi to Haldwani (Train ) Leaving parents
Back Jounery with Wife back to Bangalore via Vadodara
> Haldwani to Delhi (Train)
> Delhi to vadodara (Air)
>Vadodara to Bangalore (Air)
My questions:
1. Should i claim only for air fare and leave Train journey as all the location are connected with train i.e. Bangalore to Delhi for To journey and back Delhi- Vadodara- Bangalore?
2. Can i claim LTA for my parents’ journey because they would not be coming back with me to Bangalore?
1. Should i claim only for air fare and leave Train journey as all the location are connected with train i.e. Bangalore to Delhi for To journey and back Delhi- Vadodara- Bangalore?the
Ans: The place of origin for the leave travel is Bangalore. You need to decide on the place that you would declare as the place of destination for the purpose of claiming tax benefit on LTA. If you choose Haldwani as the place of destination, the exemption should be calculated as the equivalent first AC train fare from Bangalore to Haldwani and back. The air fare expense you incurred cannot be considered since you didn’t make the entire travel by air.
If you choose Delhi as the place of destination for the purpose of LTA tax benefit, the exemption shall be the equivalent air fare of Indian Airlines from Bangalore to Delhi and back.
2. Can i claim LTA for my parents’ journey because they would not be coming back with me to Bangalore?
You can use the expenses of your parents’ travel (for claiming tax benefit) to the extent of the travel in which you accompanied them.
Is it mandatory to consider 3 days of Casual Leave for claiming LTA exemption?
There is nothing in law which refers to Casual Leave or the number of days of leave with regard to availing exemption on LTA. The employee should be on leave when he or she undertakes leave travel. It could be any head of leave. However, some organizations may require employees to take leave under specific heads of leave (such as EL) while availing LTA.
Hi,
For the following journey , please suggest how the LTA would be calculated:
Mumbai to Jaipur (Flight) then
Jaipur to Bangalore (Flight) then
Bangalore to Kochi (Train) then
Kochi to Mumbai (Flight)
Thanks
Step 1: Decide on the “from” and “to” places.
From: Mumbai
To: Shall be the farthest place from Mumbai. That would be Kochi.
Step 2: Decide on the mode of transport for the purpose of LTA exemption calculation.
Since you travelled by both air and train, the mode of transport shall be train.
Step 3: Calculate the first AC train fare for Mumbai to Kochi and back (not including other places you visited).
Step 4: Calculate the exemption.
If the the first AC train fare is lower than the total travel expense (air fare + train fare), the first AC train fare shall be the exemption amount. The rest of LTA paid to you shall be taxable.
Please help on the below:
if i am travelling to
Delhi – mumbai (by air), then after 2 days(suppose) from
Mumbai – chennai (by air)
then,
what if:
chennai – mumbai (by air)
mumbai – delhi(by air)
and what if
chennai – delhi(by air)
For both scenarios:
From place: Delhi
To place: Chennai
Since the mode of travel is air for both the scenarios, the exemption shall be limited to a maximum of the equivalent Delhi-Chennai return economy fare of AirIndia or the actual travel expense incurred, whichever is lesser.
I stay with my wife & son in Mumbai.
I plan to claim LTA on our trip to Kolkata.
Unfortunately, they (Wife & son) will leave for Kolkata one week before me and come back 15 days after me. I will stay for a week.
Is the claim for the whole family admissible?
You should be travelling along with your family for your family’s travel expenses to be considered for LTA exemption. Since your family will not be travelling with you, your family’s travel expense cannot be considered.
Hi Gautham,
I am travelling next month from Indore (My Home Location) To Mangalore. I have booked Flight Tickets for my Return Journey from Goa to Indore (Mangalore to Goa, I will travel by train/bus), and am planning to Book Train (Indore to Mumbai) and then Train/Bus from Mumbai to Mangalore. Please help me out with a solution on how to claim for LTA?
You need to claim the LTA amount as per the rules in your organization. I am wondering if your question pertains to the tax exemption on LTA. With regard to the tax benefit, you can claim up to the equivalent first AC train fare from Indore to Mangalore (and back).
Me and my family travelled
from Ahmedabad to Jabalpur by train
From Jabalpur we hired a cab an travelled to bandhavgarh, orchha, khajooraho, jansi, and Gwalior.
While returning back there was no direct train from Gwalior to ahmedabad so we went to agra from Gwalior by train and then came to ahmedabad from agra by train .
Please explain how LTA will be calculated in this situation?
Step 1: Determine the “from” place and the “to” place. The To place shall be the farthest visited location from the From place.
Step 2: Make a list of dependent family members whose expense can be included for tax exemption (as per tax rules).
Step 3: The first AC train fare for all eligible members of the family shall be the total travel expense which can be considered for exemption.
Step 4: Compare the actually LTA pay received from the employer and the total travel expense calculated in Step 3. The lesser of the 2 shall be tax exemption on LTA.
Please let me know how my tax exemption will be counted
Ahmadabad to Jabalpur by sleeper class train
Jabalpur to multiple destinations like bandhavgarh, khajuraho, orchha,Gwalior , agra etc by taxi
Agra to ahmedabad by sleeper class train
Whether actual travel cost includes the taxi charge as well and compared to the 1st class train charges for the longest distance?
Step 1: Determine the “from” place and the “to” place. The To place shall be the farthest visited location from the From place.
Step 2: The equivalent first AC train fare (from the “from” place to the “to” place) shall be the travel cost for the purpose of tax exemption. In case the actual travel cost comprising train and taxi charges is lesser than the equivalent first AC fare, the actual travel cost shall be used for calculation of tax exemption.
Step 3: Compare the actually LTA pay received from the employer and the total travel expense calculated in Step 2. The lesser of the 2 shall be tax exemption on LTA.
I am planning to take LTA tax exemption in 2016.
New Delhi – Bangalore – By AIR
Bangalore -> Coorg -> Wayanad -> Ooty -> Coimbatore -> Taxi
Coimbatore -> New Delhi – by AIR
Should I Consider Ooty as my destination for LTA exemption, It is not directly connected to New Delhi by Rail, but with two breaks i.e. NEW DELHI -> Chennai -> Mettupalayam -> Udagmandalam(OOTY). Can I add up First AC ticket for this train route and consider that as maximum eligibility? Please advise.
If not, then how should I plan for best LTA tax exemption in this scenario.
Step 1: Determine the “from” place and the “to” place. The To place shall be the farthest visited location from the From place.
Step 2: The equivalent first AC train fare (from the “from” place to the “to” place) shall be the travel cost for the purpose of tax exemption. In case the actual travel cost comprising air and taxi charges is lesser than the equivalent first AC fare, the actual travel cost shall be used for calculation of tax exemption.
Step 3: Compare the actually LTA pay received from the employer and the total travel expense calculated in Step 2. The lesser of the 2 shall be tax exemption on LTA.
If my LTA is 10000 per year , can I claim 20000 if I I am claiming 2 years together..
I presume you are talking about tax exemption on LTA. Yes you can claim exemption on Rs 20,000 in a year if you receive Rs 20,000 as LTA in the year.
Hi
I am planning to travel with my Family to Munnar & Thekkady From Chennai.
Since there is no direct rail or flight available to these destination, I would be travelling to Cochin by Air and then booking Zoom Car for travel to Munnar & Thekkadyand then return to Cochin and flyback to Chennai.
Can I claim all these travel (Flight fare to & from Chennai – Cochin & Zoom Car bill)
Please suggest.
Since you plan to travel by many modes of transport, the exemption will be restricted to the equivalent first AC train fare from the place of origin to the farthest place in your tour.
Hi, but there is no direct train to that place.
Then how will the calculation of 1st AC be done.
Please take the first ac fare for the equivalent distance between any 2 places.
Hi,
I plan to visit Kargil in J&K on a family trip,
We will be flying to Srinagar and then taking a taxi to Kargil and back to Srinagar for the flight back to delhi.
1. Can I take the airfare to SXR + Taxi fare to Kargil (as per notified by the taxi association in srinagar) as the actual LTA
2. You have claimed we should use the first class rail fare between any two destinations (I presume of equivalent distance). Is this mentioned by law. If the place is not connected by train i.e. Kargil in this case.
Can we not take a flight to the nearest airport and take a taxi from there on actuals (if this falls within the yearly LTA limit?
3. I have a LTA limit of 30k per year, I have taken the LTA part of the salary last year (without having travelled, so after tax deduction)
Now if I travel before the end of this year, 2017. Can I claim LTA for 60k in March’s IT Return even if I have taken the money last year after deduction.
I think it is a matter of commonsense more than anything else, it should be allowed?
Or is it that if you have taken the LTA component post tax deduction you cannot forward that to the next year to take a lump sum combining two years???
1. Can I take the airfare to SXR + Taxi fare to Kargil (as per notified by the taxi association in srinagar) as the actual LTA
Ans: Yes, you can consider the same for calculating your total travel expense. However, calculation of the LTA tax benefit (exemption amount) is a separate exercise. Please note that the LTA exemption amount can be lower than your travel expense amount.
2. You have claimed we should use the first class rail fare between any two destinations (I presume of equivalent distance). Is this mentioned by law. If the place is not connected by train i.e. Kargil in this case.
Ans: Yes, this is as per law.
Can we not take a flight to the nearest airport and take a taxi from there on actuals (if this falls within the yearly LTA limit?
Ans: The law does not talk about which mode of transport you should use. The law only talks about how the tax exemption should be calculated given whatever mode of transport you have used.
3. I have a LTA limit of 30k per year, I have taken the LTA part of the salary last year (without having travelled, so after tax deduction)
Now if I travel before the end of this year, 2017. Can I claim LTA for 60k in March’s IT Return even if I have taken the money last year after deduction.
Ans: If, as per the Form 16 for the year, your LTA amount is Rs 30,000, you cannot seek exemption of more than Rs 30,000 for the year.
The employer paid LTC RS 20,000/- as his limit .
But Employee spent Rs26000/ as per LTC rule . Can employee get LTA exemption is Rs 20,000 or Rs 26,000.
Thanks
Regards
In this case the maximum LTA exemption shall be Rs 20,000 and not Rs 26,000.
Hi,
I took make my trip holiday package. Amount has already been paid to them. How can I claim LTA in this case ?
Note: I have boarding pass for air travel which I know I can use. Please advise other Related documents required like hotel bills , taxi fare etc.
Hotel bills cannot be used for LTA tax exemption. You need to calculate the total travel expense and then calculate the applicable tax exemption.
Dear Mr. Gautham
I travelled on leave from Pune-Delhi-Pune (Onward 04-May-2017 & Return 09-May-2017). My wife & daughter travelled from Chennai-Delhi-Chennai (Onward 04-May-2017 & Return 09-May-2017).
Am I eligible to claim LTA exemption for flight travel expenditure for self and for my wife & daughter?
You can seek tax exemption on your travel expense. However, the expense incurred on your family’s travel expense cannot be considered since your wife and daughter did not travel with you.
I traveled from chennai to Anantapur three times (NOV, OCT, APR) in a year, Is i am eligible to claim LTA ?? Please confirm.
Yes, provided you stay within the limit (maximum number of exemptions which can be claimed within a block of 4 years) as specified in the Income Tax Rules.
I traveled this march month(24th to 31st) with my family (spouse and parents). Mode of transport is Air and Taxi. Delhi to Bengaluru via flight after that hired a taxi to tour Karnataka state for 7 days to visit multiple destinations( some are connected or not by train), and back Bengaluru to Delhi via Flight. Now how to choose farthest destination in Karnataka. Please guide me how to avail LTA tax exemption in this case. I am in private job and as per company rule I traveled in 3 earned leaves.
If you wish to use your flight expense, you have to state that you travelled from Delhi to Bangalore. You cannot consider other places you visited in Karnataka.
Cannot avail Airfare +Taxi?, In one of the above case you agreed on this mode
1. Can I take the airfare to SXR + Taxi fare to Kargil (as per notified by the taxi association in srinagar) as the actual LTA
Ans: Yes, you can consider the same for calculating your total travel expense. However, calculation of the LTA tax benefit (exemption amount) is a separate exercise. Please note that the LTA exemption amount can be lower than your travel expense amount.
Yes, I did and let me clarify this.
You used more than one mode of transport (air + taxi). There are 2 possibilities with regard to LTA tax exemption claim.
Option 1: Consider the entire travel expense (air fare + taxi fare) in total. Since you have used more than one mode of travel, we need to compare your expense against the equivalent first AC fare to the farthest place. The tax exemption shall be the equivalent first AC fare or your total expense, whichever is lesser.
Option 2: Consider the airfare alone (from Delhi to Bangalore) and claim (as tax exemption) the equivalent economy air fare offered by Air India. In this case you state air as the sole mode of transport and claim the exemption accordingly.
You could see which of the above gives you a higher tax benefit.
Thanks Gautham for Prompt, I will go with Option 1, Need clarification on who will calculate the farthest place, me (while putting the claim) or employer (while approving the claim) because my bill has all destinations mentioned. I have to present the relevant supporting documents showing the point to point destinations mentioned as per company rules including Airfare+Taxi.
Your employer should determine the farthest place while calculating the tax exemption. This means that your employer should collect details of all the places you visited, from you.
Thanks Gautham for your valuable support.
Dear Mr. Gautham
I went to Chennai to Goa to chennai through air by connecting flight eg. Chennai to Bangalore to Goa & Goa to Banglore to Chennai. Can i avail full tax exemption for this trip. Please suggest
Yes, you can. However, if there is a direct flight from Chennai to Goa, the benefit should be restricted to the cost of the direct flight fare.
Can I claim LTA in case I travel lets say on 1st of the month whereas the family travels on 2nd of the month to the same destination.
Your family should travel along with you for their travel expense to be considered for tax benefit.
Hi Gautam,
1. My Family travelled to Chennai on 26th Dec 2019 and i travelled to chennai on 11th Jan 2020.(Both from different origin but same destination). Can i eligible for tax exemption?
2. My family hired a travels agency to cover few places in Chennai from 27th Dec 2019 to 10th Jan 2020 (Not on all days, selective days), whether i am eligible for Tax Exemption
3. Myself and my family hired a travel agency on 12th, 13th and 15th Jan to cover few places in chennai. Am i eligible to claim tax exemption?
4. We all returned together from Chennai. Am i eligible to claim exemption for Air fare?
Please clarify
1. My Family travelled to Chennai on 26th Dec 2019 and i travelled to chennai on 11th Jan 2020.(Both from different origin but same destination). Can i eligible for tax exemption?
Ans: No, you cannot use your family’s travel expenses since you did not travel with them.
2. My family hired a travels agency to cover few places in Chennai from 27th Dec 2019 to 10th Jan 2020 (Not on all days, selective days), whether i am eligible for Tax Exemption
Ans: No. Local travel is not covered under LTA tax benefit. Also, you did not travel with your family during this period.
3. Myself and my family hired a travel agency on 12th, 13th and 15th Jan to cover few places in chennai. Am i eligible to claim tax exemption?
Ans: No. Local travel is not covered under LTA tax benefit.
4. We all returned together from Chennai. Am i eligible to claim exemption for Air fare?
Ans: Yes.