Leave travel allowance (LTA)

Meaning: LTA stands for leave travel allowance. It is provided by an employer to cover the travel expenses of an employee who goes on a holiday trip. This allowance is exempt from tax under Section 10(5) of the Income Tax Act, 1961.

Who can apply:

1. Spouse of the individual
2. Parent of the individual (mainly dependent on the individual)
3. Children of the individual
4. Brothers and sisters of the individual (mainly dependent on the individual)

Block years in LTA:
BLOCK NUMBER BLOCK PERIOD
1 1986- 89
2 1990- 93
3 1994- 97
4 1998- 01
5 2002- 05
6 2006- 09
7 2010- 13
8 2014-17
9 2018- 21
10 2021-2024

List of exempted expenses under Leave Travel Allowance:
1. Air travel: The economy-class fare of the national airline by the shortest air route or the actual travel expense paid, whichever is less, is exempt from tax.

2. Train travel: The first-class rail fare by the shortest route or the actual travel expense paid, whichever is less, is exempt from tax.

3. Bus: The deluxe or first-class fare of the available public transport by the shortest route or the actual travel expense paid, whichever is less, is exempt from tax.

Limitations of Leave Travel Allowance:
1. LTA covers only domestic trips. International travel is not covered.

2. LTA is provided to cover travel expenses only.

3. To claim LTA benefit, the mode of transport should be either railway, air or other public transport.

4. An individual cannot claim LTA exemption for more than two children. This restriction does not apply to children born before 1st Oct 1998.

5. In the case of a multiple birth after the first child, the children are considered as one child only.

Use case:
1. A leave report is a must for exemption.
2. Boarding passes for both the onward and return journeys are mandatory.
3. Only two journeys are allowed in one block.
4. Family members must be added in the system.
5. If an employee misses the claim in the first year, only one claim can be carried to the next block year.
For example:

20-2021- Non-Taxable
2021-22- Non-Taxable
22-23- Non-Taxable
23-24- Taxable