Here's what you need to know about Leave Travel Allowance?
LTA is a tax exemption given to employees by their employer, when the former is travelling with their family or alone.
Prior to the close of every financial year, working people through various measures try to minimize the amount being paid to the government in the form of tax.
One such measure is the LTA or Leave Travel Allowance, one of the best tax savings tools that one can avail, for salaried employees to avail tax exemptions.
LTA is a tax exemption given to employees by their employer, when the former is travelling with their family or alone. The amount paid by the employer is tax free.
Under Income Tax Act, 1961, Section 10(5) with Rule 2B specifies conditions relating to LTA. One can avail LTA claim only if you have taken leave from your job for travel purposes.
Although employers usually do not require to submit proof of travel to tax authorities, it is mandatory for them to collect proof of travel details from employees, as the employers have the right to demand documentary proof if needed.
It is always advisable for employees to keep a record of their travel such as boarding passes, flight tickets, invoice of travel agent, duty pass and other documentary proofs in case the assessing officer or the employer demands for it.
There are certain travel limitations applicable under Leave Travel Allowance.
- Leave Travel Allowance covers only domestic travel and does not cover international travel
- The mode of travel should be either air travel, railway or public mode of transport
BankBazaar report tells us about the benefits of LTA for an employee.
Firstly, it is one of the important components of the salary structure that helps in saving income tax. It can be claimed for travel fare or tickets within India only. Expenses incurred for accommodation or any other fee will not be eligible for exemption.
An employee can produce his/her travel-related bills for the journey through air, train, bus or any other mode of transport and save on taxable income.
An employer adds the LTA to employees salary structure based on various factors such as title, position, pay scale, etc. LTA benefits can be availed only if it is a part of the salary structure.
Another good thing about LTA is that you can not only avail claim for yourself alone, but also if you are travelling with family members - parents, siblings, spouse and children as well provided you have traveled with them on those occasions.
Here's how you can claim LTA.
Before you decide to submit claim for LTA, first you are advised to check your pay structure.
The LTA amount will be different from one employee to the other, however, if you are eligible for LTA, you should produce tickets/bills as per the criteria and submit the same to your employer.
As every company officially announces the dates for LTA claims, you will need to fill in the applicable forms, attach the documents such as travel tickets, boarding pass etc., and submit it to your HR or accounts team.
It may be noted that you need to make the LTA claim before the employer makes the final calculation for tax liability.