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I hadn't expected I would answer questions on leave travel allowance (LTA) at a college reunion. But, as things panned out, I ended up doing just that.
When one of my friends said he was rushing to plan a trip by March 2013, as he did not want to lose the LTA exemption, he caught everyone's attention. When I explained the deadline was December 2013, not March 2013, some of those present wondered whether they could plan two holidays in case they hadn't taken any in the last block -2010-13. The answer was 'yes'.
I said LTA could be availed of twice in a four-calendar-year period, for self or family (spouse, children and dependent parents). In case of air travel, the LTA exemption would be valid for travel in the economy class of a national carrier, through the shortest route. For other modes of travel, exemption would be valid on the air-conditioned first-class train fare through the shortest route, in case the end-points are connected by rail. If not, it is also valid on the first- or deluxe-class fares of public road transport, if there is a recognised mode of public transport.
A friend who is a passionate driver and frequently takes trips in his car across the country was sceptical on whether tax rules would recognise travel by personal vehicle. Again, the answer is 'yes'. However, to discourage false claims, some employers don't allow this. According to law, exemption is allowed on all modes of travel and is restricted to the actual expenses on travel - fuel and toll charges. Of course, if required, the bills for these would have to be presented as proof for verification by tax authorities. Some employees claim such exemptions in their tax returns, in case an employer doesn't allow these exemptions. For travel to multiple places, exemption would be based on the cost of travelling to only one destination. Usually, one selects the farthest destination.
Another friend, who said he had not taken a leave in the last three years, wanted to know whether he could take one or two leaves by December 2013. And, if he took a single leave, would he lose the other? He was happy to know there was a 'carryover' concept, according to which an unutilised LTA could be carried forward and claimed in the first year of the next four-year block.
This means in the 2014-17 block, anyone with a leftover LTA claim would be entitled to three trips. As I knew my friend was planning to join another organisation in the near future, I clarified LTA could be claimed for multiple trips from both the employers, if the concession was unutilised. Of course, the norm for the total number of trips would have to be adhered to and employers would ask for a declaration of the number of trips the exemption was being claimed for.
Some friends planning to go abroad were disappointed at the fact that exemption was available only for travel within India. That, too, for travel alone, not accommodation, food or sightseeing.
What if a person entitled to an LTA doesn't get leave and his/her family travels without him? Unfortunately, to avail of an LTA, an employee has to be part of the trip.
As we started planning our next reunion, travel plans changed. The friend rushing to plan a trip keeping in mind the March 2013 deadline postponed his plans. Another decided to avail of the 'carryover option'. And, many of us expressed hope the law would be changed to include foreign trips and hotel expenses as well.
Pramod Achuthan
The writer is Tax Partner, Ernst & Young
LTA EXPLAINED:
- You will get LTA allowance twice in a block of four years
- Allowed for domestic travel, by train, flight or road
- Not allowed for foreign travel
- 2010-2013 block is getting over in December 2013
- You are allowed to carry over one allowance to the next block
- Even if you leave one company without using the LTA, it can be claimed from the next firm
