leave travel allowance exemption

9 Things an HR Professional needs to know about LTA

By: Sunder Singh
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An HR professional is supposed to know everything. For the silliest of questions, employees look up to the HR department for answers. In such case, there are a few tricky things that a beginner HR person might not have answers for. LTA is one such thing. If your company allows LTA, you, as an HR professional, must know the basics to be able to answer your employees’ questions and manage the allowance.

Leave travel allowance, i.e., LTA is a common form of tax exemption provided to employees by many employers. LTA is the allowance paid by an employer for employee’s traveling expense within the country when s/he is traveling either alone or with family. The amount for LTA is tax-free and exempt from taxes under Income Tax Act.

Here are some relevant things about LTA an HR professional needs to know.

Exemption for fare only

LTA exemption can be claimed when an employee goes on a holiday to any place in India. This exemption is limited to the actual travel cost of the employee and excludes other expenses, like food, stay, etc. The actual fare is decided based on a comparison between the tickets booked by the employee and the tickets of government affiliated means of travel. The LTA is allowed on whichever is lower.

Family LTA

Family LTA means an exemption for spouse, children, parents, brothers, and sisters who are mainly dependent on the employee. However, if the employee’s family travels without him/her, LTA is not permitted.

Travel within India

For LTA exemption, travel needs to be undertaken within India and overseas destinations are not covered.

Exemption amount

The, for example exemption is provided on the actual travel expense, if your company provides LTA of INR 40,000 but an employee spends only INR 30,000 on travel cost, the exemption is limited to only 30,000.

Restrictions on the number of children

Leave travel allowance exemption is not liable for more than two children of an individual born after October 1, 1998. This restriction doesn’t apply to the children born before this date and for an employee whose second born are twins/triplets/quadruples. In addition, the allowance covers travel for biological,step-children  as well as adopted children of the person.

Digital solutions

There are now digital solutions available for employers and HRs which simplifies the entire process of employee’s leave travel allowance claim Zeta OptimaTM, a digital LTA solution, allows management of all LTA claims submitted by employees giving a big relief to the HR department. Zeta uses a government approved database for verification and enables employees to save up to 30% in taxes. It is an entirely  paperless solution that offers ease of use for both employees and employers.

Maximum amount of LTA exemption

LTA exemption is limited to the amount of LTA provided to the employees as a part of the CTS. As mentioned earlier, an employee cannot claim exemption beyond the original LTA amount.

LTA claim by husband-wife duo

Though both spouses can claim the exemption on LTA from their employers, the claim cannot be made for the same journey.

Carry forward of LTA

If an employee claims for only one journey in a block, s/he can make another journey in the first year of the next block and claim it. In such cases, a total 3 journeys for the block can be claimed. However, an employee can claim only two journeys in a block of four years, and the claim for both the journeys cannot be claimed in one year.

Shortest route was taken

An employee must take the shortest route to the destination to be eligible for LTA.

For example, if an employee is going to Mumbai from Delhi on a vacation, the actual traveling cost from Delhi to Mumbai and vice versa will be eligible for LTA.

However, if the employee goes to Mumbai via Lucknow, or Bhopal, s/he won’t be eligible to claim for the entire journey rather just for the first destination.

These are some of the must-know facts about leave travel allowance that every HR professional as well as employee should be aware of. It not only helps an employee to make most of the LTA provided by their employers, but also eases the reimbursement process within an organization.

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