I have received many queries through comment, on my email, facebook page of HR SUCCESS Forum and HR SUCCESS Forum after my last post on Leave Travel Allowance i.e. How to design Leave Travel Assistance- LTA policy of your company? Hence, I thought to compose all the queries in a new post and post it, so that, all of you can go through it and get benefited. Hope you will like it.
FAQ 1: As we know that LTA tax exemption can be claimed two times in block of four years. Does it mean that I cannot claim LTA every year?
You can claim LTA every year i.e. 4 times in block of 4 years. Current block year is 2010-2013. But only two LTA claims will be non taxable. Rest both will be taxable.
FAQ 2: Is there any limit of LTA tax exemption?
No, there is no limit set by Income Tax. Employer can give any amount as LTA and employee can claim the same. But there are some rules which should be kept in mind like bills submission, shortest path of journey etc.
Company should have a policy on eligibility of LTA for an employee. Generally it is one Basic salary or 10% of CTC depends from company to company.
FAQ 3: I have not claimed LTA in first year. Can I claim LTA of both years in next year?
Yes, if you are eligible for Rs 15000 per annum LTA and not able to claim it in first year then you can claim Rs 30,000/- in second year and can get tax exemption on total amount provided you have actually made that much expense.
FAQ 4 : I am handling LTA claim processing in my company. How do I ensure that an employee has not claimed LTA more than two times when he joins in last calendar year of current LTA block and claiming LTA. Eg. One of employee joined in 2013 and current LTA block year is 2010-2013. Now he claims LTA as per eligibility. How do I know that he has not claimed it in 2010, 11 and 12 in his previous employments?
You can simply demand self declaration from employee that he has not claimed LTA more than twice in current LTA block including his previous employment and keep it in your record for future reference.
FAQ 5 : I have claimed LTA once in current block year 2010-2013 and now cannot claim my second LTA for tax exemption due to some reason. Can I claim it in next LTA block year i.e. 2014-2017 and still get tax exemption?
Yes, you can still claim the second LTA of current block year i.e. 2010-2013 in next LTA block year and get tax exemption but you need to ensure that you claim in the first calendar year of next block year i.e. 2014.
Also you are eligible for two times LTA tax exemption in block year 2014-2017.
FAQ 6: Do an employer need to collect proof of travel from an employee as proof of travel?
In a judgement, in case of Larsen and Toubro, Supreme court has mentioned that employer can not be held responsible for collecting bills related to travel made by employee while claiming LTA which means now employee is directly responsible for same and income tax has authority to demand such proofs from employee during audit.
Hence employees need to keep copies of such expenses.
FAQ 7 : I did not claimed my LTA in current block year for all 4 years. My LTA eligibility is Rs 15000 per annum i.e. Rs 60,000/- not claimed yet. Can I claim the whole amount in first calendar year of subsequent LTA block year i.e. 2014-2017 and take tax exemption on it?
Yes, you can do so. From income tax exemption perspective there is no restriction on claiming Rs 60,000/- in 2014 provided you adhere to LTA claim rules. Actually, you need to also see your company policy and what does it states in such cases. Both Income Tax Act and company policy should be followed.
FAQ 8 : I have not claimed LTA for 3 years in current LTA block years. Can I claim amount of all four years in last calendar year i.e. 2013 and get tax exemption after producing necessary bills?
Yes. Same logic as in above FAQ.
FAQ 9 : Can I claim LTA for foreign trips and take tax exemption?
No, Tax exemption is only for travel in India. Employee can still claim LTA as per company policy but tax exemption can not be granted.
FAQ 10: What if, I have LTA eligibility of Rs 50000 but my travel expense is only Rs 20000/-?
You can claim Rs 50,000/-. For Rs 20,000/-, you will get tax exemption and rest Rs 30,000/- will be paid by company after deducting tax.
FAQ 11: Can I and my wife claim LTA?
You can not claim LTA for same journey together but can claim for different and take tax exemption.
FAQ 12: Can I claim both my LTA exemption in a year for two different travels?
No, You can not claim twice in a year. Only one claim a year is allowed.
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