Employees give Leave Travel Allowance (LTA) to reimburse employees’ travel expenses incurred during a leave period. It covers expenses incurred for travel by air, train or other public transportation, but the reimbursement is based on the actual amount spent or as per the limits set by the employer or tax authorities. The LTA rules can cause confusion to many, especially when air travel is involved. Some common questions people ask are: can you claim LTA if you have a confirmed flight ticket; do you need to book your flight ticket from a particular website to be eligible for LTA; is your family eligible for LTA; which documents do you need to submit to claim LTA when you travel through a flight?

1) WHO IS ELIGIBLE TO CLAIM LTA?

Employees having LTA as a component specified in their salary structure can claim an exemption under Section 10(5) of the Income-tax Act, 1961, for the purpose of travel expenses. Employees can claim LTA for the travel expenses incurred by themselves, spouses and children during the leave period. Additionally, parents, brothers and sisters are also eligible but only if they are wholly or mainly dependent on the employee.

Public sector and private sector employees are eligible to claim LTA if it is a part of their salary structure, though there are some minor variations in the rules.

"You should carefully go through the LTA policy of your employer with regard to your eligibility, entitlement, and other documentation requirements. These may vary from employer to employer; for example, the monetary limits or the taking of leaves for a minimum period to avail LTA, etc," says Kuldip Kumar, Partner, Mainstay Tax Advisors.

For instance, a central government employee can only claim LTA if he or she has completed one year of continuous service on the date of the journey. Further, the LTA rules for central government employees entitled to air travel are different from those who are not.

2) CAN YOU CLAIM LTA AGAINST FLIGHT TICKETS?

LTA exemption is available for a maximum of two journeys within a block of four calendar years. The current block is 2022-25. If you don't travel during the current block, the exemption can be availed in the first year of the following block (2026-2029), says Rama Karmakar, Tax Partner, EY India.

For central government employees, the allowance can be claimed during any period of leave, including casual leave and special casual leave. A similar rule will apply to private employees as well.

3) HOW MUCH LTA CAN YOU CLAIM FOR YOUR AIR TRAVEL?

Shalini Jain, Tax Partner, EY India, says, "As per Rule 2B of the Income-tax Rules, only travel expenses (air/rail/road) for the shortest route between the origin and base location and destination will be exempt from tax, subject to limit."

The amount that an employee can claim as LTA will be based on the economy airfare of the national carrier for the shortest route to the place of destination or the amount spent by the individual, whichever is less, Karmakar says.

Reimbursement under the leave travel allowance scheme will not cover incidental expenses and expenditure incurred on local journeys. Soni explains, "Expenses such as local conveyance, sightseeing, hotel stays, and meals are not eligible for LTA exemption."

4) CAN YOU CLAIM LTA FOR DOMESTIC AND INTERNATIONAL TRAVEL?

Kumar says, "LTA exemption is allowed only for travel within India, hence international travel would not be eligible for exemption." So, LTA can only be claimed if you travel within India.

5) DO YOU NEED TO BOOK A FLIGHT TICKET FROM A PARTICULAR WEBSITE TO BE ELIGIBLE FOR LTA?

It is mandatory for eligible central government employees to book tickets through three authorized travel agencies (ATAs) to claim LTA — i) Balmer Lawrie & Company Limited (BLCL), ii) Ashok Travels & Tours (AU), iii) Indian Railways Catering and Tourism Corporation Ltd (IRCTC).

"However, in case of unavoidable circumstances, where the booking of the ticket is done from an unauthorized travel agent or website, the financial advisors of the ministry or department and a head of the department not below the rank of joint secretary in subordinate or attached offices are authorized to grant relaxation," says Yogesh Kale, Executive Director, Nangia Andersen India.

Central government employees not entitled to air travel reimbursement but wishing to travel by air are no longer required to book their air tickets through these three travel agencies.

Private employees usually do not have any restrictions on where they have to book air tickets to claim LTA.

6) WHAT DOCUMENTS DO YOU NEED TO SUBMIT TO CLAIM LTA?

Divya Baweja, Partner, Deloitte India, says, "From a tax perspective, an employee is required to fill Form 12BB and submit it to the employer along with the proof of expenditure. As proof of expenditure, an employer typically requests for original or digital copies of flight tickets and boarding passes to verify attendance on the flight."

Further, when travelling by air in India, it is advisable to review the information provided by the respective airline carrier and airport, he adds.

When claiming LTA for family members, ensure that they accompany you during the journey, to avoid any trouble later.

7) CAN YOU CLAIM LTA FOR AIR TRAVEL ON ONE SIDE?

The Income-tax Act,1961, does not restrict a person from claiming LTC for air travel for only one leg of the journey, provided all other conditions are fulfilled, says Baweja. For private sector employees, Yogesh Kale, Executive Director, Nangia Andersen India, says, "The claimable LTA amount for air travel of one side (and travel by any other mode from the other side) will depend on the policies of the employer. So far as the tax exemption is concerned, it would be available against the total amount of LTA drawn, only to the extent of the amount spent on air travel on one side (and the amount spent, if any, on travel by any other mode on the other side)."

Soni explains that some employers may have specific rules regarding the mode of travel, such as requiring a round-trip journey, to be eligible for reimbursement.

8) CAN YOU CLAIM LTA IF YOU HAVE A CONFIRMED AIR TICKET? 

Is a boarding pass enough to claim LTA?

Kumar says, "A confirmed ticket or journey details does not entitle a person to LTA exemption. The employee needs to actually travel on leave to any destination within India to avail of the LTA benefit provided by the employer. Most employers require their employees to attach the original boarding pass as proof of travel to claim LTA exemption."

9) WHO WILL PAY FOR THE TICKET IF YOU CANCEL THE TICKET?

"Cancellations made less than 24 hours before the travel will require the submission of a self-declared justification by the employee. All the three ATAs have been directed to provide zero/nil cancellation charges. Till then, cancellation charges are to be reimbursed for all cases where cancellation was due to the circumstances/reasons beyond the control of government employee," says an office memorandum of the Department of Personnel & Training dated August 29, 2022. This cancellation rule will apply to central government employees entitled to air travel.

Government employees who are not entitled to air travel but still wish to travel on a flight and book tickets through any channel other than the three authorized agencies need to bear the cancellation charges.

10) CAN YOU CLAIM LTA UNDER THE NEW TAX REGIME?

LTA exemption is not available under the new or concessional tax regime. The employee should opt for the old regime of taxation to claim LTA exemption, says Karmakar. Keep in mind that the concessional tax regime is the default tax regime as of now.