With the year end approaching, tourists plan a vacation to use up the Leave Travel Allowance (LTA). Travel Agents are expected to be more knowledgeable of what LTA means for taxes. With that in mind, here are three aspects about LTA that you should keep note of.
EXEMPTIONS
First and the most important is the tax exemption angle. The Income-Tax department allows to claim exemption from tax on LTA only twice in a block of four calendar years.
These blocks are also notified by the department. For example, 2012 falls in the 2010-2013 block. This implies that in these four years, one can claim the exemption for the LTA amount only twice.
But what if a person has travelled only once in the 2010-2013 block? In such a case, he can carry forward the travel to the first year (2014) of the next block (2014-2017). In addition to this, he will be eligible to travel two more times in the next block.
All what these rules imply is that is an office may be paying an amount as LTA every year. Nevertheless, if he has already claimed exemption on LTA twice in that particular block, this portion of his income will be taxable in the remaining two years of the block.
Thinking of restricting vacationing to every other year to fit the exemption rule? Well, when both he and his spouse are working, he can work around this rule a bit. Both cannot claim exemption for the same journey. So both can vacation every year and claim exemption for two different journeys each.
CLAIMS
The second aspect relates to what he can claim. Under LTA, he is eligible to claim only the expenses incurred on travel per se. Expenses incurred on stay, food, sightseeing, and so on are not included. The travel must also be within the country.
He can claim travel expenses for himself and eligible members of his family. These eligible members include spouse, children (not more than two, if they are born after 1998) and dependent parents, brothers and sisters.
The third aspect relates to the amount he receives.
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