Leave Travel Concession (LTC) & Leave Travel Allowance (LTA)

Leave Travel Concession (LTC) / Leave Travel Allowance (LTA)

An employee can claim expense for a holiday or personal travel (not on official duty) as Leave Travel Concession (LTC). Organizations and companies offer this facility of reimbursement of leave travel expenses. An Employee can claim LTC twice in a block period of four years. For a block of four years (2018- 2021), An employee can claim two such LTC's.

Exemption in respect of Leave Travel Concession(LTC) [Sec 10(5)]

The exemption is available in respect of Leave Travel Allowance received by employees from their employers for travelling to any place in India:

· either on leave or

· after retirement from service or

· after termination from service

The exemption is available for:

· The employee

· Spouse of the employee

· Children of the employee

· Parents of the employee

· Brothers and Sisters of the employee

· or any of them wholly or mainly dependent on the employee

The exemption will be limited to the amount spent by the employee on such leave travel, subject to conditions.

Rule 2B Specifies Conditions concerning the same. It mentions the ceiling on the number of journeys for the place of destination.

Under Rule 2B:

· Exemption will be available regarding two journeys performed in a block of 4 calendar years commencing from 1986.

· Where the employee does not avail such travel concession or assistance during any block of 4 calendar years, he can carry forward one such LTC to the immediately succeeding block of 4 calendar years and be eligible for exemption.

Example:

An employee does not avail of any LTC for the block 2014-17. But avails it during 2018. In this case, the employee can carry forward a maximum of one such holiday to the succeeding block. Therefore, one carried forward journey will be eligible for exemption, and the employee can avail of two more journeys in the 2018-21 block.

Sl no

Conditions

Exemptions

1

Where the travel is by Air

Least of the following:


A) Actual expenditure incurred
B) Economy class fare (Air India)

2

To a place where Railway facility is available

Least of the following:


A) Actual expenditure incurred
B) First class A.C fare

3

To a place where Railway facility is not available

3a

Where a recognised transport facility is available

Least of the following:


A) Actual expenditure incurred
B) Deluxe class bus fare

3b

Where a recognised transport facility is not available

Least of the following:


A) Actual expenditure incurred
B) First class railway fare of similar distance.

Additional Pointers:

· An employee can claim LTC twice in a block period of 4 years

· To avail of this exemption, the employee can be a Citizen or a Non-citizen of India

· One block period consists of 4 calendar years. The government defines this. The current block period is 2018- 2021. The next is 2022-2025, and so on.

· You can claim only one LTC in a given Calendar Year. The claim cannot be made in consecutive years but can be made alternatively. That is, claim in:

· Yr1 & Yr2

  • Yr2 & Yr3
  • Yr3 & Yr4

is not allowed

However,

  • Yr1 & Yr3
  • Yr2 & Yr4

is allowed

· An exception to the above condition is when you have not claimed LTC in the initial two years of the block and want to claim it in the 3rd and 4th years.

· If you have not claimed any LTC in one block period, you can carry forward one holiday period out of the two. The carried forward claim must be made in the first calendar year of the next block period.

· An employee has to apply for a minimum of 3 days of paid leave to claim LTC.

· The government does not specify any limit for the amount of LTA that the company can give. It is subject to the company or organization policy.

· Cruise and sea voyages are not exempted under LTC

· Expenditure on hotel accommodation and food are also not exempted under LTC