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Your boss has finally given you a break, and you know just the perfect place to spend your holiday. You look up the ticket prices, but even the cheapest flight is very expensive.
It's time to stop looking at the fares because you can actually save tax while on a holiday. Want to know how? By claiming your Leave Travel Allowance (LTA).
When it comes to saving tax, Leave Travel Allowance/Leave Travel Concession is one of the best friends that an employee can have. Leave Travel Allowance is an income tax exemption offered by an employer to his employee. As per this, the employer reimburses the travel expenses for the vacation taken by an employee. However, any other expense, such as food, shopping, lodging, etc., is not included in the exemption.
The exemption is applicable whether you are traveling alone or with your family. So the travel expenses for your family are also reimbursable by your employer and are tax-FREE! But here's the thing: the Income Tax Department has described the word family. But For the purpose of the Income Tax Act and LTA, a family consists of:
It couldn't be easier. You just need to fill in the details in Form 12BB and submit the proof of your travel like the boarding pass, rail tickets, travel agent's invoice, etc. However, there's a red flag here. Many employers do not provide for LTA/LTC in the salary structure of the employee. So don't forget to check with your employer before you consider claiming LTA/LTC.
Here are the Preconditions to Claim LTA:
Of course, like everything else, there are some preconditions to claim Leave Travel Allowance/Leave Travel Concession exemption as well:
The fare is exempt as per the following conditions:
You can carry forward your LTA/LTC:
Yes, you read it right! The government lets you carry forward your unclaimed LTA to the first year of the next block. This means if you have claimed only 1 LTA in the previous block of 4 years, you can carry forward and utilize the 2nd LTA and claim it in the first year of the next block. However, if you are unable to claim it in the first year, you will lose the opportunity.
Suppose the 4-year block for your LTA is 2014-2017. During this period, if you have not claimed your LTA or if you have claimed it only once, then you will be allowed to carry forward 1 LTA to 2018 (first year of the next block, i.e., 2018-21). However, If you do not claim it in 2018, it will lapse.
What if you have 4 Children?
The applicability of restriction of two children, in such cases, is different. If, after having one child, you have more than 1 child (twins, triplets, quadruplets, etc.) on the second occasion, then they are considered as one child for the purpose of LTA. Thus, such expense on their travel ticket is allowed.
Block Year is different from Financial Year
Yes, These block years are different from Financial Years and are created by the Income Tax Department. The current block is 1st January 2014 – 31st December 2017.
The beaches of Goa are calling you! Or will it be a chill trip to Andaman and Nicobar with your family this time around? Forget all about the world and travel like that Wanderlust in you! Still not sure how to calculate and claim LTS/LTC? Get the help of our tax experts; Book Book eCA Now!
LTA and LTC are two terms used interchangeably for the same tax benefit. LTA stands for Leave Travel Allowance, while LTC stands for Leave Travel Concession. Both refer to the exemption of travel expenses incurred by an employee for a vacation within India.
You can claim LTA/LTC for your family members if they travel with you or separately. However, your family for this purpose includes only your spouse, children, dependent parents, and dependent siblings. You can claim LTA/LTC for only two children born after October 1, 1998, unless they are twins or multiple births.
You need to submit Form 12BB along with proof of your travel expenses, such as boarding pass, rail tickets, travel agent's invoices, etc., to your employer. You also need to provide the details of your family members who traveled with you or separately. Your employer will deduct the LTA/LTC amount from your taxable income and issue you a Form 16. You do not need to submit any proof to the Income Tax Department, but you should keep them for your records.
