How to maximise benefits of Leave Travel Allowance

In an online chat with Get Ahead readers on December 19, Balwant Jain, tax expert and CFO, ApnaPaisa.com answered queries on benefits of leave travel allowance.

Here is the unedited chat transcript:

Nitin Deshmukh: Who is eligible to avail of LTA benefits?

Balwant Jain: LTA benefit can only be claimed by a salaried person. The salaried person can claim LTA on the basis of expenses actually incurred by him on traveling to any place in India either on holiday or on leaving the job and going to any other place either to take up another job or otherwise. In order to be eligible to claim LTA, LTA should be part of your salary.

Vinayak Tavade: How can I get the maximum of LTA benefit? My eligibility is 7k per annum?

Balwant Jain: The benefit of LTA can only be claimed in respect of expenses incurred for travelling be it air, rail or any other mode of transport. The expenses can be claimed in respect of expenses incurred on travelling with your family members. Family for this purpose includes your two children, wife whether dependents or not. your siblings and parents who are mainly dependent on you are also include.

Lotan Hal: If I travel this December by when can I claim LTA?

Balwant Jain: the claim for LTA should be made before your employer actually makes final calculations of your tax liability. So for journey undertaken in December, you should submit your claim before your salary for March is disbursed. It is in your interest to submit the claim as early as possible because it may not be even possible for your employer to adjust the excess tax deducted later on.

Sonal: What all expenses can be claimed under leave travel allowance?

Balwant Jain: Expenses actually incurred for traveling like air fare, rail fare of air conditioned first class or deluxe bus fare can only be claimed. Hotel rent and even sight seeing and local conveyance exp can not be claimed under LTA.

Shashi Nair: is LTA limit a fixed amount OR a percentage of Gross and what is the Max limit ?

Balwant Jain: As per the provisions of income tax act and rules there are no monetary limits either as percentage or absolute amount in respect of LTA. So each employer has the freedom the decide what component of salary one wants to allow its employee to claimed as LTA. The amount of LTA, of course, should be reasonable in relation to overall salary of the employee.

Jim Vejvoda: What if I don't avail of my LTA? Will it lapse?

Balwant Jain: If you do not avail the LTA during the block period, your employer should pay you the amount after deducting tax on it. The ultimate treatment would depend on the practice. However since LTA is part of the salary and in case the employee does not avail this, the same needs to be paid to the employee after treating this as taxable after deducting tax on it.

kavita bavekar: How is LTA taxed, if at all?

Balwant Jain: Unspent portion of your LTA shall be added to your taxable salary and tax shall be deducted on the total of salary including the unspent LTA. Effectively the unspent LTA shall get taxed at your highest tax slab.

Teju Salian: On what basis can I claim LTA?

Balwant Jain: LTA can only be claimed on the basis of expenses on travel incurred by you either yourself alone or with your family as explained in another answer.

Gurshan Gurmeet: I and my wife both work. Can we both claim LTA claim simultaneously? if not, how can we derive maximum mileage?

Balwant Jain: Yes both of you can claim LTA but not for the same expenditure incurred. So working couple can claim LTA for four journeys undertaken during the block period of four years as it is not necessary that your spouse or child should be dependent on you. In case you have separately incurred expenses on the same travel you both can claim those expenses but not the same expenditure.

Abdul Warith: If I have four children and I take all four of them in plane along with my wife, how much lta can i claim?

Balwant Jain: As per income tax rules you can claim LTA only in respect of two children born after 1st October 1998. In case of child born earlier, the restriction of two child does not apply. So in case your children are born after this date, you can claim the air fare as charged by national Carrier.

suman singh: What is the maximum limit of money one can claim as LTA?

Balwant Jain: The maximum amount of LTA which you can claim is lower of the amount of LTA given by your employer or money spent by you on such travel.

Aatish Jagmanani: What is the most one can avail as LTA benefit?

Balwant Jain: Amounts actually spent on travelling either air or rail or other mode of transport can be claimed. As far as monetary limits are concerned there are no such limits as per the law but this should be reasonable in relation to your salary.

salim: Can my wife and I both claim LTA in one year? How will it affect our tax outgo?

Balwant Jain: Yes your and your wife both can claim LTA in the same year but not for the same journey. There is no restriction as to the year in which you can claim LTA. The restriction is to the number of journey you can undertake in the block of four years. So you can undertake two journey's in the block of four years. Even both the journeys can be in one year for yourself.

anil: Can I claim more amount as LTA than I am eligible for?

Balwant Jain: No you can not claim more than what you are entitled to though you might have spent more money than what you are entitled to.

shinde: How many times in one year, can I claim LTA?

Balwant Jain: As per my reading of the law, yes you can, provided your employer gives you that much LTA. There is no restriction as to the year in which you can claim LTA. The restriction is to the number of journey you can undertake in the block of four years. So you can undertake two journey's in the block of four years. Even both the journeys can be in one year for yourself.

rittika negi: what are the 10 most important facts that claimanst should know about LTA?

Balwant Jain: Rittika, your's is the most difficult question. I will try to answer this within the limit of 400 characters.1. Available for inland travel only.2. Can only claim expenses incurred.3. Can be claimed twice in block of four calender years.4.You can travel alone or with your family. 5. Can be claimed for two child if born after 1st oct 1998. limit reached.

shaishav: How do companies benefit by giving LTA benefit to employees?

Balwant Jain: The benefit of LTA comes tax free in the hands of the employee. Thus by offering LTA companies can make the pay package tax friendly and attractive to employees.

kunika: If I am in employment by how long can i carry fwd my travel allowance?

Balwant Jain: The benefit of LTA has to be claimed within a block of four calendar years. The current block is 1st Jan 2010 to 31st December 2013. In case you are not able to claim the LTA for this blockm you can carry it forward to the calender year 2014 only and not beyond. The brought forward LTA claim in 2014 shall be taken into account while computing the limit of two journey's in 2014-2017 block.

vijay: How to claim LTA if I am in the midst of switching jobs? Can I claim it from my ex as well as current employer?

Balwant Jain: You can claim it from your present employer if the journey is undertaken while you are working with him. Please note that the number of journey's for which you can claim LTA exemption shall not exceed two during the defined block of four years. So even when you travel from one place to another place after resigning from one job, you can claim LTA if your employer provides you LTA for such shift.

babu prasad: if I take the claim from the company and goes for LTA later can I still eligible for LTA calim by declearation or production of tickets while filing returmsbabu Prasad

Balwant Jain: Since the LTA is an allowance and is only exempt if it has been used. So even if your employer has not treated this payment as exempt LTA, you can still claim at while filing your return provided you have actually incurred the expenses. You will have to produce the documents in case you case is selected for detailed scrutiny.

goutam mazumder: Can I get any Income tax benefit for LTA availed?

Balwant Jain: LTA to the extent actually spent by the employee is exempt from income tax. so to the extent you have spent the LTA availed from your employer will be tax free in your hand.