Few facts about LTA

Some nice to know things about the LTA component of one's salary -

1. If you do not wish to claim LTA in one particular year you can have your employer carry forward your LTA for the next year.
2. You don't need to submit a proof/bills for the travel undertaken to the employer now. This has been termed in a judgement by Supreme Court in 2009. check this out. But this doesn't mean that you need not keep the bills. The taxation department might still want them from you directly.
3. The current block of LTA is 2010-13. You can claim tax benefits twice during these 4 years.
4. The bills can be any domestic travel. You cannot show fuel bills of the personal vehicle though.
5. You and your working wife can both claim LTA but not on the same travel.
6. LTA covers only travel and not the stay, which is weird. 

You can find details in my old post on LTA here.

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Can Holiday Package be claimed as LTA?

Found this article on the above topic. Thought to spread the word. Do check out - [one mint].

The answer is - Yes, it can be as far as it is a domestic travel, another thing to be noticed is that LTA is for spouse, dependent children, dependent brothers or sisters only, so if you have taken a holiday with your extended family or children who are no longer dependent on you, then you can’t claim LTA exemption on that part of the expense.

Since LTA can be claimed only for travel – if your holiday package included hotel and sightseeing (which it normally does) – you won’t be able to take an exemption for that.

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Leave Travel Allowance - Sixth Pay Commission

The sixth pay commission has recommended some modifications to the Leave Travel Allowance rules for the Government employees. These changes have been made effective from September 1, 2008. I've tried to put in most of the changes in this post.

Highlights:

• Parents dependent on the Govt. employees are eligible for LTA irrespective of whether they are staying with Government employee or not.
• Fresh employees can avail 3 home town travel and one to any place in India during the first two block of for years.
• Travel entitlements for LTA will be same as that of official tour with no daily allowance.

The parents (stepmother and stepfather)who are wholly dependent on the Government employees shall be included in the definition of family for the purpose of LTA, irrespective of whether they are residing with the Government employee or not. The definition of dependency will be linked to the minimum family pension prescribed in Central Government and dearness relief thereon. The extant conditions in respect of other relations included in the family including married/divorced/abandoned/separated/widowed daughters shall continue without any change.

Types of LTA:

Fresh recruits to Central Government are allowed to travel to their home town along with their families on three occasions in a block of four years and to any place in India on the fourth occasion. This facility shall be available to the Government officers only for the first two blocks of four years applicable after joining the Government for the first time. The blocks of 4 years shall apply with reference to the initial date of joining the Government even though the employee changes the job within Government subsequently. The existing blocks will remain the same but the entitlements of the new recruit will be different in the first eight years of service. All other provisions concerning frequency of travel under LTA are retained.

Entitlement for LTA:

Travel entitlements, for the purpose of official tour/transfer or LTA, will be the same but no daily allowance shall be admissible for travel on LTA. Further, the facility shall be admissible only in respect of journeys performed in vehicles operated by the Government or any Corporation in the public sector run by the Central or State Government or a local body. Air Journey by Private Airlines will however, continue to be admissible as per Ministry of Finance O.M. No. 19024/1/E-IV/2005 dated the 24th March, 2006 and in terms of the orders of DOPT in this regard.

Encashment of earned leave along with LTA

Government officers are allowed to encash ten days earned leave at the time of availing of LTA to the extent of sixty days during the entire career. The leave encashed at the time of LTA will not be deducted from the maximum amount of earned leave encashable at the time of retirement. It is further clarified that where both husband and wife are Government servants, the present entitlement for availing LTA shall remain unchanged, and encashment of leave equal to 10 days at the time of availing of LTA will continue to be available to both, subject to a maximum of sixty days each during the career.

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LTA- Leave Travel Allowance

Leave Travel Allowance (LTA) is an allowance/benefit that your employer gives you to cover your travel expenses. This is a tax saving instrument as well. Your employer gives you money to go on vacation and the money is not taxable! So far so good…

But there are stipulations/rules from the government as in any other benefit.

Let’s get a look into LTA in this post…

What do I do to claim LTA?

Nothing more than getting a break from the work! Isn’t that great?

· You should take a leave from work and travel to anywhere in India. International travels are not covered.

· Travel alone or take the family along with you. However, you need to be on the list of travelers to get the claim. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.

For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).

What is covered?

Only the travel costs are covered. All the eating, lodging and partying expenses are yours.

So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.

What if you want to travel by a car? If a car is owned by a central government organization like ITDC, the state government or the local body, LTA is permitted.

If you could not get public transport and resorted to private transport, try and get a bill. If the bill is not accepted by your employer, you can always file an income tax return, claim an exemption and get a refund.

You must take the shortest route though. The LTA is covered for the shortest route only.

Can I claim LTA every year?

No. You can only do that twice in the block of 4 years. This block is not calculated with the start of your employment. The government defines these blocks. The currently running block is 2006-09 -- January 2006 to December 2009.

You can only claim LTA once in a year. This means, you are entitled to go on leave any number of times but it will be tax free only once in a year. If you are married, you can ask your spouse to claim the other journey.

But I can’t travel. My job doesn’t allow me to.

Then you can carry it forward.

One LTA can be brought forward and claimed in the first year of next block.

Let's say you do not take your LTA in 2002-05. You will be able to take one LTA in 2006. This means that, in the 2006-09 block, you will be totally entitled to the three journeys.

I switched my job. What happens to my LTA?

You can still claim your LTA. Let’s say, you claimed one of your LTAs in 2006. 2007 you switched jobs. You can now claim the remaining LTA from the present employer. The only thing you need to show the current employer is the previous tax returns.

What if I don’t claim?

If your LTA is not utilized, it gets added to your salary and you will be taxed on it.

Let's say you and your spouse are both employed and both have LTA as part of the salary package. Your LTA is Rs 20,000 and hers is Rs 20,000 too.

Both of you and your child go for a holiday. The tickets for the three of you amount to Rs 15,000. You supply the tickets to your office and this amount will be eligible for a tax deduction; the balance Rs 5,000 will be taxed. You can claim exemption only to the tune of your expenditure.

If you claim this, your spouse will not be able to claim this same holiday from her employer. His/ Her Rs 20,000 will be taxed. Unless, of course, you go for another holiday and he/ she claims it.

Or, let's say, you spend Rs 30,000 on tickets but your LTA is just Rs 20,000. You can claim up to Rs 20,000 and tell your spouse to claim his/ her ticket from his/ her employer.

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