Leave Travel Allowance: All You Need to Know

A salary is comprised of various components including provident fund, medical allowance, conveyance allowance, etc. and most people know about most of these. However, only a few people know about leave travel allowance.

What is Leave Travel Allowance (LTA)?

As the name suggests, Leave Travel Allowance is the amount that an employer pays to their employee when they travel either alone or with family. This amount is tax-free under the conditions defined in section 10(5), Rule 2B of the Income Tax Act.

It’s important to remember that whether you avail LTA or not, you get the amount from your employer either way. However, if you do decide to avail it, then you get the full amount. On the other hand, if you don’t, then the employer will transfer the amount after deducting the taxes from it.

The following are some of the key points to remember about LTA:

• You can claim LTA only if you have applied for a travel leave from your organization, and made an actual journey.
• LTA only covers the travel expenses and not food, accommodation, etc.
• You can apply for LTA if you are traveling by yourself or with your family which includes your parents, spouse, siblings, and children. However, if you are traveling with friends or extended relatives, then you can’t cover their costs under the same.
• You can claim LTA only two times per block, which is a certain period decided by the government from time to time. An example of this is 2014-2017.
• There are no restrictions on the type of travel you opt for under LTA. So, you can travel by train, air, etc. Just be sure to keep the travel receipts with you as a proof for your employer.
• There is no maximum allowable amount for LTA as per the income tax act. Your employer is free to allocate as much amount of your salary as they want to LTA.

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