There are dual benefits for Indian employees about traveling. While you take an official break for traveling any destination in India with your family, you also save tax on your travel expenses with LTA, which is provided by employer. It is only smart to make most of this benefit. This post aims to elaborate on certain features of LTA as a savings tool.
What is LTA?
- · #Leave Travel Allowance is an allowance provided by employers for domestic travel for the employee and immediate family
- It covers only the travel expense by air, train incurred during the travel, it also covers taxi and auto rickshaw only if train route is absent
- It covers the travel expenses incurred by the individual and their immediate family. Other family members are excluded from availing Leave Travel Allowance
- One can make a claim only twice in a block of four years, the present block is Jan 2014 – Dec 2017
- #LTA also can be carried to the next block if it is not utilised, if under utilised the balance amount can be added
- International travel expense cannot be claimed under LTA
- You can claim your Leave Travel Allowance if you haven’t travelled, but the amount will come under taxable income
- LTA is fully tax exempted under Section 10(5) of the Income-Tax Act, 1961, Rule 2B
Limitation of LTA
Like any other exemption rules, LTA also has its limitations. The companies have certain eligibility criteria for LTA. If the allowance of the previous block is not exhausted, then one journey can be carried forward to the next block. However, the balance has to be exhausted within the first year of the next block. The allowance is capped by employers; the claims above the exemption limit will not be processed. LTA can only be claimed if the employee is part of the travel, family including spouse, children, brother and sister if they are dependants.
How you make most of LTA
As you can only claim twice in 4 year block, planning in advance helps. Ensure, you are taking prior written permission from the employer. Though air travel is allowed, it covers the minimum airfare of economy class. The road travel exemption is limited to the AC1 rail fare by the shortest route.
You need to keep the proof of your travel, tickets and copy of e-tickets in place.
Innovations in claiming LTA online – to help HR professionals an employers
Zeta, a Fintech startup, recently launched fully digital Leave Travel Allowance (LTA) solution, #Optima LTA Card, to help organisations manage employees’ leave travel allowance claims/ reimbursements digitally and enable employees to submit claims instantly. Built on digital platform, is designed to process LTA claims the paperless way. Employees are now empowered to submit their travel claims digitally and thereby avoid extensive paperwork. It is compliant with all legal mandates set by the Income Tax Department. Zeta team at the back-end tracks the shortest distance between two destinations using a government-approved database and thereby enable accurate assessment.
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Organisations can be free of verifying paper bills manually since all verifications will be handled by Zeta Optima at the back end. Human Resource professionals can use this platform to digitally store bills for over seven years and can track LTA bills and claims online.
Happy traveling :)