(i) the spouse and children of the individual;
(ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependant on the individual
The following is the summary of Rule 2B of the Income Tax Rules which provides rules for exemption :—
(i) where the journey is performed by air, an amount not exceeding the air economy fare of the National Carrier by the shortest route to the place of destination;
(ii) where places of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and
(iii) where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed between such places, the amount eligible for exemption shall be—
(A) where a recognised public transport system exists, an amount not exceeding the first class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and
(B) where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail.
Thus, it is clear that generally speaking, an employee entitled to leave travel assistance will now get complete exemption in respect of the amount actually incurred on the performance of travel by air, which will be limited to the economy fair of the National Carrier. If a person performs the journey by air-conditioned first class by railway, then the amount of exemption in respect of leave travel assistance would be limited to air-conditioned first class railway fare by the shortest route to the place of destination.
The deduction in respect of LTA would be available in respect of the two journeys performed in a block of four calendar years, with some exceptions. The present block is 2010, 2011, 2012 and 2013.
Under the provisions of Section 10(5), the benefit of leave travel concession to enjoy complete exemption from income tax is available to an individual employee not only for himself but also for his entire family. Thus, in respect of travelling by an employee, his spouse and his dependent parents and other members of his family, as mentioned above, as also his children.
In respect of children born before 1-10-1998 there is no restriction on the number of children entitled to leave travel concession under Section 10(5).
However for children born after 1-10-1998 maximum two children would be eligible to enjoy the exemption.
The employee would be able to enjoy complete exemption in respect of leave travel assistance for actual journeys performed by the air economy class or by the air-conditioned first class in railway. and will not, thus, be restricted to the air-conditioned second class rail fare only.