Leave travel Allowance or LTA is one of the best tax saving tools available to employees. LTA is provided by employers for their employees’ travel expenses. Employees can claim LTA for two trips in a block of four calendar years. In case no claim is made in a block, individuals can carry it over to the next block.
Employees can be travelling alone or with family to avail the benefit. However, only the travel costs are paid by the employer and not the other expenses such as food, shopping, entertainment, etc. The amount paid under LTA is tax-free under Section 10 (5) of the Income Tax Act, but there are some rules related to the exemption.
Why should you claim LTA?
LTA is a great option to maximize your tax-saving. However, LTA depends on the salary structure offered by the employer. Therefore, it is advisable to check the salary structure to make sure that LTA is available to you. In case you are eligible to claim the LTA and have incurred actual travel expenses which can be claimed, you must claim LTA.
It is advisable to claim LTA when your travel expenses meet the LTA threshold specified in your CTC. Making smaller claims will exhaust your option to claim LTA and hinder tax saving.
How to claim LTA?
The process to claim LTA is usually specific to the employer. Generally, employers announce the due date within which LTA can be claimed by the employees and may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent, etc. and a mandatory declaration. Though, it is not considered mandatory for employers to collect proof of travel, it is advisable for employees to keep copies of the record to submit to employer based on LTA policy of the company or to tax authorities on demand.
LTA conditions
LTA eligible exemptions
(Edited by : Sudarsanan Mani)
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