How To Claim LTA Tax Exemption Under Old Tax Regime?

Amar Ranu, Sr. VP and Head - Investment Products and Insights, Anand Rathi Shares and Stock Brokers

The private sector employees are permitted to claim the Leave Travel Allowance up to two times in a block of four years, which means only two trips or journeys undertaken twice in a block of four years will be exempted from income tax. The amount received as LTA is tax-free up to a specific limit under Section 10(5) of the Income Tax Act, 1961.

Employees are required to provide bills/ tickets according to the requirements and submit all those documents to the employer. Most of the companies declare the dates to claim LTA beforehand and one then needs to fill the application form, attach documents with it, and send these documents to the accounts or HR team of the organization. If an employee is authorized to take the LTA amount of Rs.30, 000, but he/she claims only Rs.20, 000, then the applicable deduction of LTA will be Rs.20, 000 and the remaining amount of Rs.10, 000 will be added to the income of the employee. This added money will be considered under the tax.

Mayank Bhatnagar, Chief operating Officer, FinEdge

The process for claiming LTA is employer specific. Typically, you'll receive notification from your HR team about the last date for submitting your LTA proofs (this amount can be claimed twice in four calendar years, for domestic travel only). At that time, you will need to submit the mandatory declaration, along with copies of supporting documents such as your boarding pass or tax invoice from your travel agent in your HRMS. Do note that actual travel is a must for claiming an LTA deduction.

On another note, you may want to reconsider whether you want to remain in the old regime at all. The new one is much cleaner and hassle free. If the tax savings differential is just nominal, it may not be worth it - so do consult your CA and decide which way you'd want to go.

Suman Bannerjee, CIO, Hedonova, a US based Hedge Fund

Under the old tax regime, claiming Leave Travel Allowance (LTA) tax exemption requires specific conditions to be met:

Actual Travel: LTA can only be claimed for the actual travel expenses incurred by the individual and their family members on domestic vacations within India.

Mode of Travel: LTA can be claimed for travel via air, rail, or any other mode of public transportation. The exemption does not apply to expenses incurred for private vehicles or self-driven cars.

Proof of Travel: To claim LTA, individuals must submit proof of travel, such as tickets, boarding passes, or travel agency invoices. It is advisable to retain these documents for auditing purposes.

Number of Claims: You can claim LTA exemption for two journeys taken within a block of four years.

Anita Basrur – Partner, Direct Tax – Sudit K Parekh & Co. LLP

There are various deductions and exemptions, which are available to salaried persons/assessees. Deductions include premium paid towards insurance policies, housing loan interest, principal amount of housing loans, contribution to various schemes etc. which gets deducted from total taxable income.
Exemptions on the other hand, do not get added to the total taxable income itself. These are not treated as part of taxable salary itself. These exemptions help the employer to structure the salary of the employee in a tax efficient manner.

One of such exemption available to employees is Leave Travel Allowance (LTA). LTA is an allowance paid to the employee by the employer for travel expenses incurred while he or she is on leave.

The conditions necessary for claiming the exemption of LTA are as follows:-
a. The employee needs to undertake the actual journey.
b. The travel should be within the boundary of India (overseas travel is not eligible for exemption).

To claim the exemption, employee may travel alone or with his/her family. The definition of family includes the spouse, children, dependent parents.

The exemption for LTA is allowed under block year concept. A block is a period of 4 calendar years and differs from the financial year. The exemption for LTA is allowed twice in one block year (i.e. twice in four calender years).

The current block under consideration is from calendar year 2022 till 2025. LTA scheme also has a provision for carry forward of unclaimed LTA exemptions. If the employee has not availed one or two exemptions in one block year, he or she can carry forward the same to the next block year but with the only condition that such pending journeys of the earlier block year has to be undertaken only in the first calendar year of the subsequent block years or else the carry forwarded unclaimed journeys will lapse.

The exemption that can be claimed under LTA for journeys made from various modes of transport is as follows:-
A. If the journey is undertaken by Air - The exemption amount is restricted to the fare of the economy class of national carrier airlines by shortest route.
B. If the journey is undertaken by rail,
the exemption will be cost of 1st class AC fare of railway.
C. If the place of origin and destination is not connected partially or fully by rail - the exemption amount will be
- where public transport is available the cost of 1st class or deluxe class fare by shortest route is exempted.
- where public transport is not available, AC fare of the railway by shortest rout is exempted.

The procedure to claim LTA is comparatively easier. The employer lays down the due date within which the employees can submit their travel documents such as tickets (in original), invoices, boarding pass etc. along with necessary declaration. Though it is not compulsory but it is advisable to keep the copies available because Tax Authorities can demand the same for verification.

Aashika Jain, financial expert and editor, Forbes Advisor

LTA or leave travel allowance is an exemption available on the actual cost for domestic travel done via airlines, railway or buses by employees when on leave. This exemption is allowed under Section 10 (3) of the Income Tax Act only under the old tax regime and is applicable only if offered by your employer as a way to reduce your actual tax burden.

To claim LTA, you need to file a document detailing travel ticket expenses incurred by you for yourself and your spouse and your children (two children are permitted). No other expenses can be filed under the LTA. You must keep the actual tickets available with you for tax verification purposes. You can claim your LTA twice under the block year, which is set by the government. Currently, the block year is 2022-2025.

Somya Srivastava, CEO, Prayatna Microfinance

When it comes to claiming LTA tax exemption under the old tax regime, it is crucial to follow the proper steps to ensure compliance and maximize your savings. At Prayatna Microfinance, we understand the importance of financial well-being and strive to empower our clients with knowledge. Here are some helpful tips on claiming LTA tax exemption under the old tax regime:

'Navigate the labyrinth of tax regulations with confidence. To claim LTA tax exemption under the old tax regime, start by carefully assessing your eligibility criteria. Ensure you have supporting travel bills, invoices, and relevant documentation for the journeys undertaken. Understand the specified time limits and permissible modes of travel. File your tax returns diligently, capturing the LTA exemption accurately.

Pamarty Venkataramana ( PVR ) is an International Corporate Lawyer from New Delhi, lndia. A Prolific Columnist on Business, Commerce and Policy matters

To claim Leave Travel Allowance (LTA) tax exemption under the old tax regime, there are specific guidelines and procedures that need to be followed. LTA can be claimed only for domestic travel within India, and it is applicable to both salaried and self-employed individuals. LTA consists of two components - fare amount and eligible expenses. The fare amount is limited to the actual air, rail, or bus fare of the shortest route to the destination.

It is essential to retain the travel documents and related bills, such as travel tickets, hotel bills, and any other relevant receipts.

Note that there is a limit to the tax exemption available under LTA. As per the Income Tax Act, the exemption is limited to the fare amount of the shortest route to the destination, based on certain conditions and restrictions set by the government. In the old tax regime, LTA tax exemption is available, but it is important to understand the tax implications for any salary components not eligible for exemption.

It is advisable to consult a qualified tax professional or refer to the Income Tax Act for specific rules and regulations related to claiming LTA tax exemption. The guidelines may vary based on the individual's employment status, organization's policies, and tax laws prevailing during the relevant assessment year.

Mr. Sujit Bangar, Founder, Taxbuddy.com

The Indian Income Tax System plays a vital role in the country's economic growth and development. One of the key components of this system is Leave Travel Allowance (LTA), which provides tax benefits for individuals who undertake domestic travel. In this article, we will delve into the intricacies of LTA and how it impacts taxpayers in India.

LTA is a component of an employee's salary package that allows for tax exemptions on expenses incurred during domestic travel. It is primarily designed to encourage individuals to explore the country and take vacations with their families. The Income Tax Act, 1961, governs the provisions related to LTA.

To claim LTA benefits, certain conditions must be met. Firstly, the individual must be a salaried employee, as LTA is not applicable for self-employed individuals. Secondly, the travel should be within the country, and only expenses related to air, rail, or bus travel are eligible for exemption.

Under the Income Tax Act, individuals can claim LTA benefits twice in a block of four years. The current block period is 2022-2025. The exemption is limited to the actual amount spent on travel, subject to certain conditions. However, there is a cap on the exemption amount based on the individual's salary structure.
To avail of the LTA exemption, individuals must provide proof of travel. This includes submitting travel bills, boarding passes, and other supporting documents. It is important to note that LTA can only be claimed for the actual travel expenses and not for other costs such as accommodation, food, or shopping.

Unused LTA in a block can be carried forward to the next block period, but only once. However, it is important to understand that LTA is not tax-free income. The amount claimed as LTA is taxable if it exceeds the actual expenses incurred on travel.

Leave Travel Allowance (LTA) serves as a significant component of the Indian Income Tax System, providing tax benefits to employees undertaking domestic travel. By understanding the eligibility criteria, exemption limits, proof of travel requirements, and taxability aspects of LTA, individuals can maximize their tax savings and enjoy the perks of exploring the diverse beauty of India.