Leave Travel Allowance: Saving tax is a top priority for the working class. The common man delves deeply at the beginning of each year to make investments that can reduce his tax burden. However, it is not just investments that can save you taxes, but other parts of your CTC too can lessen your income tax. One such component is Leave Travel Allowance aka LTA. Let us understand the ifs and buts of Leave Travel Allowance, to benefit from the tax break it bestows.

What can be claimed?

If you are a travel buff and LTA forms part of your Cost to Company, then you can claim your LTA twice in a span of four calendar years. What forms part of your Leave Travel Allowance or Leave Travel Concession claim is the travel fares i.e. the expenses you incur on airfares, train tickets or bus fares. Also, the journey for which you are claiming LTA must be taken within India.

How is LTA calculated?

For travel via airways, either economy class fare of a national airways carrier by the shortest route, or the actual amount spent, whichever is lower is considered to claim LTA. For journey via railways, either air-conditioned first class train fare by the shortest route or the actual amount spent, whichever is lower can be claimed for LTA.

For journeys which are not connected by rail or air travel, in case of travel to a place where a recognised public transport is available, either amount equivalent to a first class or deluxe class fare by the shortest route or the actual amount spent, whichever is lower can be claimed for LTA.

For places where recognised mode of transportation is not available, either the AC First Class Rail fare by the shortest route or the actual amount spent, whichever is lower can be claimed for LTA.

Who all can travel?

To claim LTA, your travel journey can include you (or maybe not) and other family members including your spouse and children (whether dependent or not), as well as your dependent siblings and parents. The number of children is restricted to two if born after 1 st October 1998.

What happens if you do not claim your LTA?

If LTA is a part of your CTC and you don’t happen to claim it in a particular year, then this amount is paid after deduction of taxes as per your taxable income slab, which is due to the fact that LTA tax break is available only in the form of reimbursement when you submit your travel bills and claim LTA. Also, if you don’t claim LTA in your current block of four years (eg 2018-21), then it gets partially carried over to the next block, wherein you can claim LTA on three journeys in the span of next four years.