Tax Saving: Important news for the employees. Actually, if you also want to get tax exemption, then reading this news will prove to be a profitable deal for you. Let’s go to the news below and know how to get tax exemption.
Like HRA, LTA is also given to employed people as an allowance. LTA stands for Leave Travel Allowance. In LTA, the expenses incurred by the companies on going on holidays to the employee and his family while traveling somewhere in the country are reimbursed.
This travel allowance is provided by the employer and is mentioned in the salary package. If you are also given LTA by the company, then you can also take tax exemption on it. Tax exemption is available on LTA under section 10(5) of the Income Tax Act 1961. But there are some conditions about which every employee should know.
These are the rules regarding LTA-
- For tax exemption on LTA, only those journeys can be included in the expenses which are done within the borders of India. The cost of traveling abroad is not included in this.
- You must be on leave from the company at the time you are including the travel expenses for LTA and this leave should be mentioned in the records of the company.
- In LTA, you can include the travel expenses of your life partner and two children along with yourself. Apart from this, siblings or parents dependent on you can be included.
- In LTA, you can include the cost of rail travel, air travel, bus travel etc. i.e. the fare of any government or other recognized transport. Private car, cab, food and drink, stay and sightseeing expenses cannot be included in this.
- If you are on a business trip and have taken your life partner and child along, then you will not get the benefit of LTA.
Rules related to tax exemption-
- You cannot take tax exemption on LTA every year, in this tax exemption can be taken twice in 4 years. For this, the Income Tax Department has already fixed a block of four years each. If both you and your wife are employed and both are provided with LTA facility by the company, then the family can travel every year. In this case, both husband and wife can get tax-free money every year for two different calendar years.
- If for any reason you are not able to take tax exemption in the concerned block, then tax exemption can be taken in the next block on subsequent holiday travel. But, you will have to take such tax exemption in the first year of the next block itself. In this case, you can use the expenses of three leisure journeys in the next block for LTA tax exemption.
- There is one more thing to be understood regarding tax, that if the employer has given you LTA up to 1 lakh, but your travel expenses are 50 thousand rupees, then the exemption will be available only for 50 thousand rupees. If your expenditure is Rs 1.2 lakh, then the exemption amount will be Rs 1 lakh.
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