Leave Travel Allowance (LTA) is a tax-saving benefit provided to salaried employees, allowing them to claim exemptions on travel expenses incurred during leave. It helps reduce taxable income under certain conditions and applies to transportation costs for travel within India. However, the exemption is subject to actual expenses and the limits set by tax authorities or employers.
What is LTA and who can claim it?
LTA is a part of an employee’s salary package that covers travel expenses while on leave. Employees eligible for LTA can claim tax exemption under Section 10(5) of the Income Tax Act, 1961. This exemption applies to travel undertaken by the employee, their spouse, and children. Dependent parents and siblings may also qualify if they rely financially on the employee.
LTA is exempt from tax only in specific cases. The exemption applies strictly to travel costs, including airfare, train, or bus tickets, but does not cover expenses such as hotel stays, meals, or local transport within the city. Additionally, international travel is not eligible for LTA exemption.
How often can you claim LTA?
Employees can claim LTA for a maximum of two journeys within a four-year block period. The current block runs from January 1, 2022, to December 31, 2025. If an employee does not fully utilize their LTA entitlement within this period, they can carry forward the unused portion to the first year of the next block. However, the exemption can only be claimed if the employee has actually travelled during their leave and provides valid proof of expenses.
What are covered under LTA?
LTA applies only to domestic travel and covers transportation costs incurred for air (economy class of the national carrier), rail (first-class AC fare), or road travel (bus or hired car fare equivalent to first-class AC train fare where no rail service is available). However, it does not include expenses for accommodation, meals, sightseeing, or local transport such as cabs or airport transfers.
Deadline to submit documents
To claim LTA, employees must provide original travel tickets, boarding passes (for air travel), car rental invoices (if applicable), and payment proof through bank or card statements. A signed Form 12BB must also be submitted as evidence of expenditure. Employers typically require these documents within the financial year in which the travel occurred. The last date to claim LTA for the current block is December 31, 2025.