GUIDESMONEY MATTERS
GUIDES
Ever felt the need for a break from work, wishing for a vacation?
Travelling has always been popular among Indian employees. And to be honest, travelling can be an expensive affair.
So, many companies in India offer a fixed amount to assist with their travel expenses. Leave Travel Allowance (LTA) is a tax-free allowance that comes as a component of your salary.
What are you waiting for?
Start packing your bags.
But wait! First, you must know what exactly LTA is and how to claim your travel expenses.
Employees in India are given an allowance called LTA to help cover their within-country travel expenses. Employees who take a break from work to travel with their families can claim the tax-free component.
Further, it is governed by the IT Act of India and is subject to exemption under certain conditions. For LTA, the government follows a period different from the financial year, called a block year. A block year consists of 4 years, currently 2022-2025.
Moreover, an employee can only claim this twice within a four-year block period. The expenses can include the ones incurred during travel by rail, road, or air.
Both private and public sector employees are covered under the LTA scheme.
Also, LTA is generally a part of your salary package, with the eligibility criteria varying across employers. Only domestic travel is covered within LTA but not international travel.
The process of claiming LTA (Leave Travel Allowance) varies depending on the employer. Each employer sets a specific deadline for employees to claim LTA. Besides this, the requirements for claiming a leave travel allowance are:
The claimable amount differs across employers. You can always talk to the HR of your company to understand this component better. You can also find the allotted LTA amount in your offer letter and salary slip.
If an employee hasn't used the exemption for one or two trips in any of the four-year blocks, they can carry over the unused exemption to the next block. However, they must utilise this benefit during the first calendar year of the subsequent block.
Let's say you have only claimed LTA once in the previous block year. Subsequently, in the current block, you can claim 3 journeys, subject to making the first claim in the first calendar year.
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Leave Travel Allowance (LTA) provides Indian employees with a tax-free allowance to assist with their within-country travel expenses. It is an attractive benefit offered by many companies to support employees in taking breaks and enjoying vacations. By understanding the fundamentals of LTA, employees can make the most of this allowance. Remember to keep track of the block years and utilise any unused exemptions before the first calendar year of the subsequent block. So, if you're in need of a well-deserved getaway, don't hold back and take advantage of your LTA benefits. Happy travels!
The LTA percentage depends on your salary package or the cost to the company. Generally, it is anywhere up to 15% of your taxable income.
Since LTA is a component of your salary structure, most employers include LTA in your in-hand salary. But we suggest you connect with your HR to understand this better.
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