LEAVE TRAVEL CONCESSION/ASSISTANCE (LTC/LTA)
LEAVE TRAVEL
CONCESSION/ASSISTANCE (LTC/LTA) –Section 10(5) & Rule 2B
General Provisions
• In some cases
the employer may provide leave
travel concession or assistance to his employee to go on leave to any
place
in India either
alone or along
with his family.
• The employee is entitled to exemption u/s 10(5) in respect of the value
of leave travel
concession on or assistance
received
by him from his employer.
• 'Family' for the purposes of leave travel
concession include:
Ø Spouse of the employee;
Ø Children of the employee (dependent or independent; married
or unmarried); and
Ø Parents him. , brothers and sisters of the employee
provided they are dependent on him.
Note: No exemption is allowed for the third
or subsequent child
who is born
on or after October 1st 1998. This
rule shall not be applicable in case of multiple birth.
Quantum
of Exemption
Exemption available u/s 10(5) shall be of the
following two figures:
•
Actual expenditure incurred on the performance of journey; or
•
Amount determined as per the table
given below.
|
Particular |
Extent
of Maximum Exemption Available |
|
|
Journey
is performed by air |
Economy fare
charged by a National Carrier for the shortest
route to the place of destination |
|
|
Journey is performed any mode of transport other
than air |
Case. 1: Places of origin of journey and destination are connected
by rail |
First class AC
fare charged by
the Indian railways- for the shortest route
to the place
of destination |
|
Case 2: Places of origin of journey and destination are NOT
connected by rail |
a) Recognized public transport system
exists: First class or deluxe
class fare charged by such recognized public transport system for the shortest
route to the place of destination |
|
|
|
|
b) Recognized public transport system does not exist: Amount equivalent to the first
class AC fare that would
have been charged by the Indian railways for the shortest route to the place of destination if a railway connection existed between such places |
Note: If LTC is encashed without performing the journey, the
entire amount received by the employee would be taxable.
Note: The above exemption is allowed only in respect of travelling expenses.
Expenses on boarding and lodging, conveyance from residence
to the railway station/airport/bus stand and back and other
expenses incurred during
the journey will not qualify
for exemption.
Special Points
• Ceiling on number of journeys: The assessee can claim exemption in respect of any two journeys in a block of 4 years. The block of 4 years shall be given to us in the question.
• If the assessee has not availed LTC exemption in a particular block (whether for both the journeys or for one journey), maximum one journey can be carried forward and such carrier forward journey should be undertaken during the lst year of the next block. Such carried forward journey shall not be taken into account for determining the tax exemption of two journeys for the next block.
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#LEAVETRAVELCONCESSIONASSISTANCE
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