LTA exemption: What is Leave Travel Allowance and can you claim it at the time of filing your income tax return? | Business


LTA exemption: Salaried people sometimes want to present proof of their bills and investments to get tax deductions underneath the Income-tax Act. One frequent tax exemption out there to salaried people is the Leave Travel Allowance or LTA. Leave Travel Allowance (LTA), typically included in your wage, pays for your trip journey bills. It additionally covers journey prices for relations similar to spouses, kids (as much as two if born on or after October 1, 1998), dependent dad and mom, and dependent siblings.
To claim LTA, workers often have to offer proof of their journey bills to their employers inside particular deadlines. But what if you have missed the March 31 deadline to submit LTA exemption proofs to your employer? Can you nonetheless claim LTA?
Let’s first perceive who can claim LTA:

Who can claim LTA?

Both non-public and central authorities workers qualify for LTA exemption. In the non-public sector, an allowance is sometimes allotted for go away journey, which workers can use to claim the exemption. Government workers, on the different hand, obtain advantages in the type of journeys, which can have extra circumstances relating to the quantity of journeys or the allowed quantity per individual.
Only these assembly particular circumstances can obtain LTA exemption. Shalini Jain, Tax Partner at EY India, was quoted by ET as explaining, “An employed person having LTA as a component specified in their salary structure may claim an exemption under Section 10(5) of the Income-tax Act, 1961 (Act)…”
LTA can be claimed for 2 out of each 4 years in a specified block. Alok Agrawal, Partner at Deloitte India, notes, “The current block for LTA claims is 2022 to 2025.”
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Remember, the claim can not surpass the precise journey bills or the LTA supplied by the employer. “The exemption is available for the shortest route from the place of origin to the place of destination. Further, there are defined rules for the travel routes, and class of tickets up to which the exemption may be claimed,” he additional explains.
Private employers have their very own insurance policies relating to LTA, which can cowl varied elements similar to obligatory go away throughout journey as a substitute of utilizing weekends, submission of unique paperwork like boarding passes, and the timing of LTA claims for higher administrative administration. Employees are required to stick to those guidelines and laws, as defined by Kuldip Kumar, Partner at Mainstay Tax Advisors LLP.
Shalini Jain clarifies that exemptions for journey bills inside the metropolis usually are not permitted. Additionally, airport transfers, similar to journey from the airport to the lodge and vice versa, may additionally not be eligible for exemption.

Claiming LTA: Employer vs ITR

The process to claim LTA is not explicitly outlined in the Act or the Income-tax Rules, 1962. However, Shalini Jain explains that Rule 26C of the Rules specifies that workers should submit proof of expenditure utilizing Form 12BB to find out tax exemption and taxable income.
If you’re eligible for LTA, it’s advisable to submit all obligatory paperwork to your employer to claim the exemption and keep away from potential scrutiny. Failure to offer proof of investments and bills might result in the assumption that you have not incurred these bills, leading to increased TDS deductions by your employer.
However, even when you neglect to claim LTA by way of your employer, you nonetheless have the choice to take action whereas filing your income tax return for the monetary yr. Agrawal explains that there is not any restriction in the income tax legislation or filing utilities towards claiming the LTA quantity instantly throughout ITR filing.
Shalini Jain reinforces this, stating that the Act and Rules do not impose any restriction on instantly claiming LTA exemption in the ITR by the worker. If the employer hasn’t thought-about LTA exemption for any motive, the worker is entitled to claim it instantly in the ITR.
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LTA exemption challenges whereas filing ITR

Taxpayers may encounter challenges when claiming allowances like LTA throughout ITR filing. Abhishek Soni, co-founder and CEO of Tax2win, factors out that since the accountability for tax deduction rests with the employer upon the worker’s submission of proof, there could possibly be complexities.
Agrawal additional explains that if an worker fails to claim LTA by way of the employer attributable to the exemption not being supplied in Form 16, it may result in scrutiny from the income tax division throughout ITR processing.
Shalini Jain provides that workers claiming LTA instantly whereas filing the ITR might face the threat of receiving notices from tax authorities to confirm the claims.
“Here it will be imperative (for you) to prove to the income tax authorities the genuineness of your claim through all the supporting evidence and that it was missed to be claimed through your employer,” advises Ritika Nayyar, Partner at Singhania & Co. She emphasises the significance of preserving all related paperwork associated to journey and bills to justify the exemption.

Nilesh Desai
Nilesh Desai
The Hindu Patrika is founded in 2016 by Mr. Nilesh Desai. This website is providing news and information mainly related to Hinduism. We appreciate if you send News, information or suggestion.


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