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Valuation of Leave Travel Concession or Assistance (LTC/LTA) in India. [Section 10(5) & 10(6)(i)]

The employee is entitled to exemption under section 10(5) in respect of the value of travel concession or assistance received by or due to him from his employer or former employer for himself and his family, in connection with his proceeding—

  1. on leave to any place in India.
  2. to any place in India after retirement from service or after the termination of his service.

The exemption shall be allowed subject to the following

Different Situations Amount of Exemption if journey is performed on or after 1,1997
  • Where journey is performed by AIR
  1. Amount of air economy class fare of the National Carrier by the shortest route; or
  2. the amount spent,

whichever is less

  • Where journey is performed by RAIL
  1. Amount of air-conditioned first class rail fare by the shortest route; or
  2. the amount spent,

whichever is less

  • Where the places of origin of journey and destination are connected by Rail and journey is performed by any other mode of Transport
  1. Amount of air-conditioned first class rail fare by the shortest route; or
  2. the amount spent

whichever is less

  • Where the places of origin of journey and destination (or part thereof) are not connected by RAIL
 
    • Where a recognised public transport system exists
  1. First class or deluxe class fare by the shortest route; or
  2. the amount spent,

whichever is less.

    • Where No recognised public transport system exists
  1. Air-conditioned first class rail fare by the shortest route (as if the journey had been performed by rail); or
  2. the amount actually spent,

whichever is less.

One should also keep in view the following Points— 

1. Meaning of “Family” -

  • For this purpose, “family” includes spouse and children of the employee. It also includes parents, brothers and sisters of the employee, who are wholly or mainly dependent upon the employee.

  • However, family does not include more than two surviving children of an individual born on or after October 1, 1998

2. Only 2 journeys in a Block of 4 years is Exempt -

Exemption on the aforesaid basis is available in respect of 2 journeys performed in a block of four calendar years commencing from 1986.

3.  “Carry-over” Concession -

If an assessee has not availed travel concession or assistance during any of the specified four-year block periods , exemption can be claimed in the first calendar year of the next block (but in respect of only one journey). This is known as “carry over concession”.

4. Exemption is based upon Actual Expenditure -

The quantum of exemption is limited to the actual expenses incurred on the journey. In other words, without performing any journey and incurring expenses thereon, no exemption can be claimed. 

5. Exemption is available in respect of Fare -

The exemption is strictly limited to expenses on air fare, rail fare, bus fare only. No other expenses, like scooter or taxi charges at both ends, porterage expenses during the journey and lodging/boarding expenses will qualify for exemption. 

6. Exemption is available in respect of Shortest Route -

Where the journey is performed by a circuitous route, the exemption is limited to what is admissible by the shortest route. 

7. Fixed allowance is not subject to Exemption -

Fixed sum paid to employees by way of leave travel allowance on basis of self-declaration made by employees would not be exempt under section 10(5)—

8. Family Member Travelling Separately -

Exemption shall not be available if the family members are travelling separately without the employee who is not on leave.

 
Contents : Salary Income
 

 Important Links....for calculating Salary Income

(A). Salary -Definition & Meaning
(B). Provident Fund
(C). Allowance
(D). Perquisites
(E). Profit in lieu of Salaly
(F). Retirement Benefits
(G). Deductions
(H). Table Presentation of Salary Income (Section 15 to 17)
 
 
 
 
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