Leave Travel Allowance (LTA): Rules, Claim, Exemption & Benefits

As a salaried individual, there are various tax benefits that you enjoy. As they are deductions, they reduce your taxable income. On the other hand, the other tax benefit which is exemption is usually not included in the taxable income. Tax exemptions such as house rent allowance, encashing leaves and exemption on gratuity can be taken advantage of by the salaried class. One such tax exemption is the leave travel allowance (LTA). Do remember that tax benefits are subject to change in tax laws What is LTA? How can you benefit from the leave travel allowance exemption? Here is more information for you.

What is a leave travel allowance?

Leave travel allowance is an allowance that is given to an employee by their employer. For example, your employer has approved a travel allowance of Rs.40,000 for a trip you are planning to take with your family. However, your travel expense is Rs.25,000, and the additional cost of stay and other expenses come up to a total of Rs.35,000. As the LTA covers only the travelling expenses, your employer would reimburse you only for the travel expenses incurred. Other expenses are not covered under the LTA.

What is a leave travel allowance exemption?

The leave travel concession which is offered by your employer is eligible for tax exemption. As it is part of your salary, it is eligible for tax exemption under Section 10(5) of the Income Tax Act. Due to the LTA exemption, the LTA is disbursed as a part of your income.

What are the conditions for claiming this exemption?

You need to meet the following criteria to claim this exemption:

1. You, as the claimant, are required to cover the cost of the journey you are planning to take. After you have covered the cost, only then you are eligible to claim the exemption.
2. The location where you are planning to travel must be within the Indian borders. For example, if you are planning to travel to Lakshadweep, you are eligible for the LTA exemption. However, if you are planning to travel outside of India, you are not eligible for the exemption.
3. You can claim the exemption if you are travelling alone or with your family. If you are travelling with your family, do keep in mind that the exemption covers only two children. Also, if the children are born before 1^st October 1998, they are excluded from the exemption.

* Standard T&C Apply  

How to claim the exemption?

If you wish to claim the exemption, your employer might ask for the following documents:

1. Boarding pass if travelling by aeroplane
2. Tickets if travelling by train or bus
3. Receipts for the same
4. Form pertaining to the claiming of the exemption

Documents related to other expenses such that of food and shopping are not accepted as these are considered personal costs.  

How beneficial is this exemption?

This exemption has two benefits: it reimburses you for the cost of travelling covered by you and the travel cost is exempted under it. This allows you to save money and tax. As your partner and family are also covered under it, the added cost is also reimbursed to you.  

Things to remember when travelling

Keep in mind the following things:

1. Always safeguard your travel documents to enjoy hassle-free travel.
2. Purchase travel insurance before the beginning of your journey.
3. Only pack those things which are necessary and avoid overpacking.
4. Carry fewer valuables, if possible.
5. Always declare all your belongings to the authorities to avoid being fined.

Travel insurance not only provides financial coverage for your luggage, but also provides medical coverage if you were to fall sick during your travel. *  

Why travel insurance is a must?

When you are planning a trip with your family, you would want the experience just like you want to it be. However, it is difficult to anticipate when an emergency might take place. Loss of baggage or travel document, suddenly falling sick or being struck by a calamity are some of the incidences that you might not be able to predict. Having domestic travel insurance can be beneficial. Its benefits include:

1. Financial coverage for loss of baggage and valuables
2. Provision of temporary travel documents
3. Coverage for medical treatment and hospitalisation
4. Evacuation flights during emergencies

 

Conclusion

If you are planning to take a leave and travel somewhere, do keep in mind about this exemption. Make sure you purchase domestic travel insurance before you commence your travel to enjoy the financial protection you and your loved ones deserve. * Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.   *Standard T&C apply