How to claim your leave travel allowance

What are the most important things to do in January? Apart for making New Year resolutions, you also have to claim your leave travel allowance (LTA). If you haven’t heard form your office HR about it yet, it’s only a matter of time that you receive an email to claim your LTA. To know more, join Shree and Sid, fictional characters created by Firstpost, in their conversation regarding LTA. Shreekant is sitting in the office cafeteria when Sid walks in. Shreekant is reading a mail on his Black Berry.

[caption id=“attachment_576190” align=“alignleft” width=“380”]  Businessmen or self-employed people cannot pay themselves LTA. Reuters[/caption]

Sid: Hey, Shree, you are in the cafeteria, just give that Blackberry a break now.

More from Investing

MSMEs are breaking the traditional convention. Look who’s funding them Scale-up your startup without an investor! Here’s how

Shreekant: (With a confused look) Did you see the HR mail, it says something about LTA.

Sid: Ah, okay… So, what’s the big deal about it. They send it every year around this time.

Shreekant: (irritated) Yes, but unlike you, I am new in the job market and there are many things I don’t know about, like the LTA.

Sid: (reassuring him) No worries, Shree. You could ask the HR people for more updates or I could also tell you a thing or two.

Shreekant: Sure, am waiting for my lunch to arrive. So go ahead and tell me.

Sid: LTA is an allowance you get from your employer to travel.

Shreekant: I figured that out. I was on leave last week. So can I claim for that?

Sid: Well, did you travel during that time? You get it only when you are on leave from work and you actually travel.

Shreekant: Nope, I did not last week. But, in June I did go for a week long leave and I travelled too. What’s the benefit actually?

Sid: The LTA amount is exempt from tax under certain conditions. Keep in mind that it covers only travel expenses. So, don’t bother asking for expenses such as boarding and food and shopping.

Shreekant: Very funny Sid. Of course, I figured out it’s only travel expenses. But family travelled too. So, can I claim for their travel too?

Sid: Smart question. You can claim LTA when you travel alone or with your family.

Shreekant: So, does my girlfriend ….

Sid: Nope. Family here is defined as per the Income Tax laws. So, it includes spouse, children, and dependent parents. And, I did not know you had a girl friend….

Shreekant: (blushing and ignoring the girlfriend bit). I was just asking, I travelled with my parents and my younger sister.

Sid: Yes, if your sibling is dependent on you, he and, or she are also included in the definition of the family.

Shreekant: Well, I am not married yet. Am sure you claim this LTA for your children when you travel.

Sid: Well, yes I do. You see this LTA exemption is allowed for up to two children, if the children are born after 1 October 1998.

Shreekant: Your children must surely be born after that, you don’t look so old.

Sid: (With a straight face) I am going to ignore the old bit of your last statement.

Shreekant: So, I guess, the boss must be claiming it for his kids too. He looks old enough to have kids born before Oct 1998.

Sid: (irked) I am not commenting about the bosses age. Anyway, do you want to know about LTA or deviate from the topic and guess people’s age?

Shreekant: Oops, sorry…you were saying…

Sid: Well, if the children were born before October 1998 then, I could have claimed an exemption for any number of children.

Shreekant: You have twins don’t you.

Sid: Yes, as far as LTA goes twins or triplets after the first child are accepted.

Shreekant: Lucky Farah Khan!

Sid: Did I tell you that a businessman or self-employed person cannot pay himself LTA. What’s with you youngsters… never mind about what Farah Khan can claim and what she can’t. You focus on your LTA claims.

Shreekant: Okay, okay…. So, what else I need to know.

Sid: It’s better to claim LTA for the journey your family made when you were travelling with them.

Shreekant: What? I didn’t’ understand.

Sid: Well, if you are claiming for the family, you should travel with them. Where can you travel?

Shreekant: Cool, I wish I knew about this before, I could have gone to Thailand instead of Goa for my last vacation.

Sid: Don’t get too excited. To get this benefit, you have to be on leave and travel to any place in India . LTA is not given for foreign trips.

Shreekant: Oh no…and please tell me air travel is included.

Sid: You can get an exemption is for any journey you make by air, road or rail anywhere in India . As far as air travel goes, an economy class fare of a national carrier via the shortest route is allowed.

Shreekant: What about train fare?

Sid: For rail travel, an air-conditioned first class rail fare via the shortest route is allowed. In fact, if a recognised public transport exists on the route you travel, then up to first class deluxe fare is allowed. Or else, an amount equivalent to the AC first class rail fare is paid.

Shreekant: OK, whatever, I only fly.

Sid: Sure. FYI , other modes of travel for LTA exemption includes, bus and rented vehicles.

Shreekant: What if I travel multiple destinations during the same leave?

Sid: Well, if you’ve travelled to multiple destinations, the place that is farthest from your residence will be considered for calculating the exemption amount. But, keep in mind you must take the shortest route to claim an LTA.

Shreekant: So, when can I claim every year, whenever, as and when?

Sid: Nope, it is not possible. See as per tax laws there are predetermined blocks of four calendar years; the first block began in 1986 to 1989, the next block was 1990 to 1993 and so on.

Shreekant: Okay.

Sid: So, you can claim exemption for up to two journeys in a block of four calendar years. The current block is 2010 to 2013. So, for instance I claimed an LTA exemption in 2010, then I can claim one more until 2013.

Shreekant: What if I am not able to claim in a block? What if I miss a block?

Sid: In such a case, you can use the carry forward facility available. That is carry forward one journey, that too only in the first calendar year in the next block of four years.

Shreekant: So in such a case, in the next block, I can claim three LTA exemptions in total.

Sid: Right, you are a fast learner.

Shreekant: What happens if I don’t travel at all?

Sid: If you do not travel, you will still get the LTA amount, but you will have to pay tax as per your individual tax bracket.

Shreekant: Okay, one last question. What amount can I get the exemption for?

Sid: You can get exemption only for the amount you are eligible for and the actual amount spent on travelling. So, if your LTA amount is 20,000 but you’ve spent Rs 25,000, you will get an exemption only for Rs 20,000. Also, in case you spent only Rs 10,000, you will get an exemption for Rs 10,000 only. You will have to pay tax on the remaining Rs 10,000.

Shreekant: Okay, sounds good. I think, I understand LTA now. Thanks.

Sid: So, you were telling me about your girlfriend.

Shreekant: Oh, lunch is here. Did you see how Pakistan beat the sh** out of India the other day…

Sid: Don’t change the topic kid………