How to Claim Leave Travel Allowance (LTA) in Simple Steps?

Imagine this—you’ve just returned from a relaxing vacation, and now it’s time to claim some of those travel expenses under Leave Travel Allowance (LTA). 

But as you start the process, you realize that you have no clue what kind of documents are required or whether you can claim hotel and food bills as well. 

And what happens in cases where you did not avail of LTA benefits in the previous block?

Worry not if these queries seem familiar to you!

This guide will break down how to claim Leave Travel Allowance so you can get the most out of your deductions and ease that tax stress a little.

So, without further ado, let’s get started! 

What is Leave Travel Allowance (LTA)?

Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) is a travel allowance provided by employers to employees as part of their total salary component. It allows employees to claim a tax deduction on travel expenses incurred. 

The best part? 

Tax deductions can be claimed for LTA within specified limits and conditions as stated in Section 10(5) of the Income Tax Act, 1961. This will reduce the taxpayer’s overall taxable income. 

But there are several conditions & restrictions to this, which we will see in the next section.

Eligibility Criteria for Claiming LTA

Before you rush to file your LTA claim. Ensure that you qualify for all the below-mentioned conditions:

• The travel must be confined within India – No international travel is permitted under this scheme.
• Only actual travel expenditure is reimbursed – You may claim expenses for bus, train, or economy air travel, but there is no reimbursement for accommodation, meals, or shopping.’
• Eligible family members – You may take LTA for yourself, your spouse, and children and fully dependent parents, brothers, and sisters.
• Child restriction- LTA is available for a maximum of two children whose births should take place after October 1, 1998. If anyone has more than two kids after this date (except for multiple births in the second instance of pregnancy), he/she can claim LTA for only two.
• Valid travel evidence must be available. Tickets, boarding passes, and invoices must be delivered as proof in the attachments to your claim.

Who Are Eligible to File LTA Claims?

Any salaried employee whose salary structure includes LTA will be eligible to claim the same. The travel expenses of the following family members can also be claimed: 

• Spouse and children
• Dependent parents 
• Dependent brothers and sisters

If you are self-employed or work as a freelancer, unfortunately, LTA benefits cannot be claimed.

LTA Exemption Rules and Limits

LTA exemptions are available for two journeys during a block of four calendar years, beginning with the current block, 2022-2025.

Key highlights:

• LTA cannot be carried over: If you do not travel within the LTA period, you lose the LTA exemption. 
• No minimum waiting period: LTA is immediately available unless under certain extreme conditions, such as an employee's absence from work due to prolonged illness.
• Exemption covers actual travel expenses only: Hotel stay expenses, food, sightseeing excursions, or intra-city taxi rides are not exempt.
• Airport transfers excluded: Travel costs incurred going to and returning between the airport and the hotel or home are not chargeable to the LTA.

Tax Exemption Under Section 10(5)

• According to Section 10(5) of the Income Tax Act, salaried persons are entitled to claim Leave Travel Allowance exemption on travel made within the country. 
• Leave Travel Allowance is an exemption restricted only to the amounts that would have been incurred on actual travel costs (bus, train, or economy airfare) and can be claimed twice in a four-year block (current four-year block: 2022-2025). 
• Expenses incurred on accommodation, food, or sightseeing are not considered under this.
• More than two children born to a parent after October 1, 1998, are not eligible for the exemption.

Example: 

So, Rohan gets an LTA of Rs. 50,000 and spends Rs. 40,000 on domestic travel for his family. He can now claim Rs. 40,000 as tax-exempt. However, if he spends Rs. 60,000, only Rs. 50,000 (LTA Cap) will qualify for exemption.

Step-by-Step Guide on How to Claim Leave Travel Allowance

Claiming LTA is simple, though it has to be done in the right way. Here’s a simple breakdown on how to claim Leave Travel Allowance:

Step 1: Plan for Travel – Make sure that this trip is being undertaken within India and should fall under the current block year (2022-2025). Please note that LTA is concerned with only travel costs (bus, train, economy airfare).

Step 2: Keep Your Travel Proofs – Gather and retain the tickets, boarding passes, and invoices. If booked through a travel agent, get a GST invoice.

Step 3: Claim to Your Employer –  Most companies would give a last date to claim LTA; you should not forget to submit your documents before this date. Attach all travel proof and forms as per your company's LTA policy.

Step 4: Reimbursement or Exemption – Since your LTA is part of the salary, the company either pays you back or incorporates the same under tax exemption in the current financial year. Ensure that your employer has correctly exempted the LTA amount in Form 16 (tax deduction).

Step 5: Declare LTA in Your Income Tax Return (ITR) – While filing your income tax return (ITR), put LTA in the category 'Exempt Income' (not under deductions like Section 80C).

Common Mistakes to Avoid When Claiming LTA

Mistakes that should be averted when claiming LTA travel allowances.

• LTA would be claimed for International Travel. They are, however, domestic trips.
• Food and hotel bills may be included. LTA only covers transport expenses.
• Not Keeping Proper Travel Proofs - Losing tickets and invoices may lead to rejection.
• Incorrectly Reporting LTA in ITR - Ensure it has to be reported under Exempt Income and not deductions.

The Leave Travel Allowance is probably one of the best means to save taxes and at the same time, spend quality time with your loved ones. But to fully enjoy this benefit, one must strictly follow the travel norms within India, maintain proper travel proofs, and be within the block period for the claim.

In case you haven't claimed LTA yet, plan for a trip before the expiry of the 2022-2025 block and enjoy tax benefits!