Holiday travel allowance (LTA) is a tax-saving profit provided to salaried employees, allowing them to claim discounts on travel expenses during the holiday. This helps reduce taxable income under certain conditions and applies to transportation costs for travel within India. However, the discount is subject to real expenses and limitations set by tax authorities or employers.
What is LTA and who can claim it?
LTA is a part of an employee’s salary package that covers travel expenses during the holiday. Eligible employees for LTA can claim tax exemption under Section 10 (5) of the Income Tax Act, 1961. The discount applies to the journey made by the employee, their spouse and children. Dependent parents and brother -in -law can also be eligible if they financially trust the employee.
LTA is exempted from tax only in specific cases. The discount is strictly applied to the cost of travel, including air fare, train, or bus tickets, but does not cover expenses such as living, food or local transport within the city. Additionally, the international journey is not eligible for LTA exemption.
How many times can you do Claim LTA,
Employees can claim LTA for a maximum of two trips within a four -year block period. The current block runs from 1 January 2022 to 31 December, 2025. If an employee does not fully use his LTA eligibility within this period, they can carry forward unused part in the first year of the next block. However, the discount can only be claimed if the employee has actually traveled during his holiday and provided valid proof of expenses.
What is covered under LTA?
LTA applies only to domestic travel and covers transport costs for airplanes (national carrier economy class), rail (first class AC fare), or road travel (bus or rent car fare first class AC train fare, where no rail service is available). However, it does not include expenses for housing, food, sightseeing places, or local transport such as cabs or airport transfer.
Document submission time limit
To claim LTA, employees have to provide the original travel tickets, boarding pass (for air travel), car rental invoice (if applied), and payment evidence through bank or card statement. A signed form 12BB should also be presented as evidence of expenditure. Employers usually require these documents within the financial year in which the journey was done. The last date for claiming LTA for the current block is December 31, 2025.
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