Leave Travel Allowance (LTA)



Leave Travel Allowance (LTA) is the most common element of compensation adopted by employers to remunerate employees due to the tax benefits attached to it. An LTA is the remuneration paid by an employer for Employee’s travel in the country, when he is on leave with the family or alone.

LTA amount is tax free. Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B, provides for the exemption and outlines the conditions subject to which LTA is exempt. Through this write-up, I want to shed light on the taxability and some other interesting relevant aspects which you as a salaried employee must keep in mind.

Holidays can mean heavy expenses. However, if you are a salaried individual, you can use the same vacation to save on tax outgo. Most organisations grant employees leave travel allowance (LTA) as part of the salary package. It is exempt from tax, subject to conditions and limits.

There is also no cap on the absolute amount you can claim as LTA for tax benefits. If you plan in advance and diligently preserve the necessary documentary proofs, you can reduce your tax liability substantially, provided your organisation is generous in earmarking a sizeable portion of your salary as LTA in the first place.

10 Things about Leave Travel Allowance


Here we give you a quick low-down on what to expect.

  1. You can get LTA only if you have applied for leave from your company and have actually travelled. However, international travel is not valid. You must have travelled within the country.

  2. The entire cost of the holiday is not covered. Only the travel costs are covered. 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.

  3. If you travel by car and it is owned by a central government organisation like ITDC, the state government or the local body, then LTA is permitted. If you could not get public transport and resorted to private transport like renting a car, get a bill issued by the rental company. If the bill is not accepted by your employer, you can always file an income tax return, claim an exemption and get a refund.

  4. LTA covers travel for yourself and your family. 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). If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.

  5. LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31). The current block is 2006-09 -- January 2006 to December 2009. The earlier one was from 2002-05 -- January 2002 to December 2005. During this time period, a person is entitled to two LTA claims.

  6. Though you can claim two journeys in a block of four years, you can claim the LTA benefit just once in a year. You cannot claim both the journeys in one year. So, while a person can get an income tax exemption for two journeys in a block of four calendar years, he can make a trip only once a year. If you make two trips in a year, you lose one. One way out is to claim one and make your spouse claim the other.

  7. You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block. Let's say you do not take your LTA in 2002-05. Or that you use only one LTA. Don't worry, you will be able to take the pending LTA in 2006. This means that, in the 2006-09 block, you will be totally entitled to the three journeys.

  8. If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilised. Let's say that, in the 2002-05 block, you claimed LTA in 2003. In 2004, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.

  9. You must take the shortest route to your destination to be eligible for LTA. Let's say you are going from Delhi to Mumbai on a holiday. So the cost of your travel from Delhi to Mumbai and Mumbai to Delhi will be eligible for LTA. If you decide to go to Mumbai via Agra, Jhansi and Itarsi, your LTA from Delhi to Agra will be covered. But Agra to Mumbai will not be covered. Let's take another scenario. You traveled from Mumbai -- Kerala -- Delhi -- Mumbai. If you take a direct connection, you will be eligible for LTA. Mumbai -- Kerala -- Delhi -- Mumbai: LTA covered But if you throw in Hyderabad, then it goes out of gear. Mumbai -- Thiruvananthapuram: LTA covered Thiruvananthapuram -- Hyderabad -- Delhi: LTA not covered Delhi -- Mumbai: LTA covered

  10. If your LTA is not utilised, 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.

One should keep in view the following points:


Meaning of “Family” – The aforesaid exemption is available in respect of fare for going anywhere in India along with “family”. For this purpose, “family” includes spouse and children (Child includes step child and adopted child) of the employee. It also includes parents, brothers and sisters of the employee, who are wholly or mainly dependent upon the employee. However, family does not include more than two surviving children of an individual born on or after October1, 1998 (In reckoning this limit of two children, children born out of multiple births after the first child will be treated as ‘one child only’.

Only two journeys in a block of 4 year are exempt – Exemptions on the aforesaid basis is available in respect of two journeys performed in block of four calendar years. The different blocks are –

a. 2006-2009 (i.e., Journey 1, 2006 to December 31, 2009);
b. 2010-2013 (i.e., Journey 1, 2010 to December 31, 2013);
c. 2014-2017 (i.e., Journey 1, 2014 to December 31, 2013).

Carry Over concession – If an assessee has not availed travel concession or assistance during any of the specified four year block periods on one of the two permitted occasions (or on both occasions) , exemption can be claimed in the first calendar year of the next block (but in respect of only one journey). This is known as “carry over” concession. In such case, the exemption so availed will not be counted for the purposes f claiming the future exemptions allowable in respect of two journeys in the subsequent block.

Exemption is based upon actual expenditure – The quantum of exemption is limited to the actual expenses incurred on the journey. In other words, without performing any journey and incurring expenses thereon, no exemption can be claimed.

Exemption is available in respect of fare – The exemption is strictly limited to expense on air fare, rail fare, and bus fare only. No other expenses. Like scooter or taxi charges at both ends, porterage expenses during the journey and lodging / boarding expenses are qualified for exemption.

Exemption is available in respect of shortest route – where the journey is performed by a circuitous route; the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption will be limited to what is admissible for the journey from the place of origin to the farthest point reached, by the shortest route.

Family member travelling separately – Exemption shall not be available if the family members are travelling separately without the employee who is not on the leave – Circular No. 8/2012, dated October 5, 2012



Different LTA Situation Amount of Exemption
Where Journey is performed by Air Amount of economy class fair of the national carrier by the shortest route or the amount spent, whichever is less
Where Journey is performed by Rail Amount of air conditioned first class rail fare by the shortest route or amount spent, whichever is less
Where the place of origin of journey and destination are connected by rail and journey is performed by any other mode of transport Amount of air conditioned first class rail fare by the shortest route of the amount spent, whichever is less
Where the places of origin of journey and destination (or part thereof) are not connected by rail

  1. Where a recognised public transport system exists

  2. Where no recognised public transport system exists
  1. First class or deluxe class fare by the shortest route or the amount spent whichever is less

  2. Air conditioned first class rail fare by the shortest route (as If the journey had been performed by rail) or the amount actually spent whichever is less


FAQ on claiming LTA benefit


1. Can we Claim LTA Every Year?


One of the most common questions about LTA is whether it can be claimed every year or not? The answer is Yes – you can claim LTA every year, but you will not be able to claim LTA exemption ever year. Other Points About Tax On LTA, 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. Is entire cost of travel covered under LTA?


The entire cost of the holiday is not covered. Only the travel costs are covered. 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. Also LTA benefit is limited to LTA given by your employer in your salary.

3. Can I claim LTA for my elder Brother?


A LTA covers travel for yourself and your family. 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). If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.

4. What is Concept of Block years for getting LTA benefit?


A LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31). The current block is 2010-13 — January 2010 to December 2013. During this time period, a person is entitled to two LTA claims.

5. I was not able to claim Leave in last block. Can I claim it now?


A You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block. Let's say you do not take your LTA in 2006-09. Or that you use only one LTA. Don't worry, you will be able to take the pending LTA in 2010. This means that, in the 2010-13 block, you will be totally entitled to the three journeys.

6. I am entitled for LTA of Rs 45000/- but I have made travel of Rs 25000 /-. How can I claim balance?


A If your LTA is not utilised, it gets added to your salary and you will be taxed on it. Rs 20000/- short utilised would be paid as normal part of your salary after deducting income tax as per your Income tax slab.

7. I have changed job and i was not able to claim LTA for last year? Can i do it now?


A If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilized. For example: in the 2006-09 block, you claimed LTA in 2007. In 2008, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.


Latest LTA News


Time to submit proof for LTA, HRA tax deduction


The Central Board of Direct Taxes (CBDT) has recently released New Form No. 12BB. This is going to be the new standard form for salaried tax payers to claim tax deduction on;

  • LTA (Leave Travel Allowance) / LTC (Leave Travel Concession)
  • HRA (House Rent Allowance)
  • Interest payable on Home Loan (Section 24) and
  • All Tax Deductions under Chapter VI-A which relates to allowable deductions under various sections including Section 80C, Section 80CCC Section 80CCD, Section 80D etc.,

Submit new Form 12BB to claim Income Tax Deductions w.e.f 1st June, 2016. Below is the latest and standard Form 12BB. Click on the image to download Form 12BB.

form 12BB HRA



Download Form 12BB