Leave Travel Allowance – TAXABILITY

• MEANING : LTA may be provided by the employer to the employee and his family-

1. In connection with his proceeding on leave to any place in India, while in service.
2. proceeding to any place in India after retirement or termination from services.

• FAMILY OF AN  INDIVIDUAL MEANS

1. Spouse and children of an individual and,
2. parents ,brothers and sister of an Individual or any of them ,wholly or mainly dependent on the

• CONDITION FOR BENEFIT

1. An individual can avail the benefit of  LTA  offered by his employer, twice in a block of 4 year
2. The   present block of 4 year applicable for assessment year 2013-14 is calendar year 2010-2013.
3. If an individual has not availed the benefit twice in a block of 4 years ,the 1^st LTA availed in the next 4 year block can be taken for the previous block.
4. This exemption is available only for 2 children   of an individual born after 01.10.1998. There is no restriction for children   born before 01.10.1998, and also in case multiple birth after 1 child.

• COMPUTATION FOR EXEMPTION FOR LTA:

The   maximum level of exemption is the cost of travel on the shortest route. The exempt amount for various travelling modes are calculated   in the following manner-

Any   sum received in excess of the above is taxable under the head “salaries”

• WHEN TAXABLE:

1. LTC encashed   without  performing journey is fully taxable.
2. Expences reimbursed other than the fare is fully taxable.
3. Amount received from the employer in excess of the cost of travelling on the shortest route is taxable.