Leave travel Allowance: Who doesn’t like travelling and what’s better if it saves taxes for you!

Leave travel Allowance: Who doesn’t like travelling and what’s better if it saves taxes for you!

You must have come across a component in your salary structure named Leave travel allowance, it can save your taxes, all you should do is to take leave & travel. Income tax law provides the tax break for holidays to a domestic destination, you can either take a travel holiday alone or with your family i.e. your spouse, children, parents, brothers & sisters

You can claim the “travel costs” incurred by you as the LTA exemption and save taxes.

This exemption can be claimed for 2 journeys performed in a block of 4 calendar years. The current 4-year block is year 2014-2017, which makes 2017 as the last year for the ongoing block

How to make full use of it to save tax? Which expenses can be claimed for LTA exemption

Travel by air

In case of air travel, you can claim the actual amount spent by you, provided it is not higher than the economy class fare by a national carrier travelling by the shortest route

Travel by train

In case of travel by train, you can claim the actual amount spent by you, provided it is not higher than the air-conditioned first class fare by the shortest route.

Travel by other modes

If you are travelling by any other mode, such as a bus or a private taxi, same rule applies to the journey undertaken.

Where recognized public transport exists, you can claim the actual amount spent provided it is not higher than first class or deluxe class fare by shortest route.

Where no recognized public transport exists, you can claim the actual amount spent provided it is not higher than the air-conditioned first class rail fare by the shortest route (if the journey has been undertaken by rail)
Travelling a multi-destination journey

You might travel multiple locations on a single trip before reaching the destination, in such case LTA claim would be limited to what is admissible as discussed above (in travel modes) from the place of origin to farthest point if it has been travelled by shortest route.

What if you have not travelled on a holiday in the current block or you have not availed LTA exemption so far?

You are entitled to carry over 1 journey to the next block i.e. you could avail LTA tax benefit for 3 journeys in 2018-2021, however you must utilise 1 journey within the first year of 2018-2021 block.

What do you need to do to avail LTA tax exemption?

To avail the exemption, you must get in touch with the accounts/human resource department in your company & furnish the documentary evidence of travel to your employer so that LTA tax exemption can be claimed.

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