10 MUST knows about LTA

Leave Travel Allowance affects every salaried employee. Here we give you a quick low-down on what to expect.
1. You can get LTA only if you have applied for leave from your
company and have actually travelled. However, international travel is
not valid. You must have travelled within the country.
2. The entire cost of the holiday is not covered. Only the travel costs
are covered. So, whether you fly, hop on to a train or take public
transport, you will have to show the ticket to claim your LTA. This
means you will need to keep your air, rail or public transport ticket.
3. If you travel by car and it is owned by a central government
organisation like ITDC, the state government or the local body, then
LTA is permitted.
If you could not get public transport and resorted to private transport
like renting a car, get a bill issued by the rental company. If the bill is
not accepted by your employer, you can always file an income tax
return, claim an exemption and get a refund.
4. LTA covers travel for yourself and your family. Family, in this
case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.
For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one
birth has resulted in multiple children like twins and triplets).
If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for
your family, you should travel with them.
5. LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not
financial years (April 1 to March 31); they are calendar years (J anuary 1 to December 31).
The current block is 2006-09 -- J anuary 2006 to December 2009. The earlier one was from 2002-05 -- J anuary 2002 to
December 2005.
During this time period, a person is entitled to two LTA claims.
6. Though you can claim two journeys in a block of four years, you can claim the LTA benefit
just once in a year. You cannot claim both the journeys in one year.
So, while a person can get an income tax exemption for two journeys in a block of four
calendar years, he can make a trip only once a year.
If you make two trips in a year, you lose one. One way out is to claim one and make your
spouse claim the other.
7. You can carry forward your LTA. One LTA can be brought forward and claimed in the first
year of the next block.
Let's say you do not take your LTA in 2002-05. Or that you use only one LTA. Don't worry, you
will be able to take the pending LTA in 2006. This means that, in the 2006-09 block, you will be totally entitled to the three
journeys.
8. If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the
concession is lying unutilised.
Let's say that, in the 2002-05 block, you claimed LTA in 2003. In 2004, you switched jobs. You can still claim your second
journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it
has been claimed or not.
9. You must take the shortest route to your destination to be eligible for LTA.
Let's say you are going from Delhi to Mumbai on a holiday. So the cost of your travel from Delhi to Mumbai and Mumbai to
Delhi will be eligible for LTA.
If you decide to go to Mumbai via Agra, J hansi and Itarsi, your LTA from Delhi to Agra will be covered. But Agra to Mumbai
will not be covered.
Let's take another scenario. You traveled from Mumbai -- Kerala -- Delhi -- Mumbai.
If you take a direct connection, you will be eligible for LTA. Mumbai -- Kerala -- Delhi -- Mumbai: LTA covered
But if you throw in Hyderabad, then it goes out of gear.
Mumbai -- Thiruvananthapuram: LTA covered
Thiruvananthapuram -- Hyderabad -- Delhi: LTA not covered
Delhi -- Mumbai: LTA covered
10. If your LTA is not utilised, it gets added to your salary and you will be taxed on it.
Let's say you and your spouse are both employed and both have LTA as part of the salary package. Your LTA is Rs 20,000
and hers is Rs 20,000 too.
Both of you and your child go for a holiday. The tickets for the three of you amount to Rs 15,000. You supply the tickets to
your office and this amount will be eligible for a tax deduction; the balance Rs 5,000 will be taxed. You can claim exemption
only to the tune of your expenditure.
If you claim this, your spouse will not be able to claim this same holiday from her employer. His/ Her Rs 20,000 will be
taxed. Unless, of course, you go for another holiday and he/ she claims it.
Or, let's say, you spend Rs 30,000 on tickets but your LTA is just Rs 20,000. You can claim up to Rs 20,000 and tell your
spouse to claim his/ her ticket from his/ her employer.