Leave Travel Allowance (LTA)

LTA is one of the most common elements of compensation offered by employers to employees mainly due to the tax benefits attached to LTA. This is also known as Leave Travel Concession [LTC]  Section 10(5) of the Income-Tax Act, 1961, read with Rule 2B, provides for the
exemption and outlines the conditions for exempting LTA.

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Who can claim exemption:-
LTA exemption can be claimed by an employee for his travel to any place in India
with or without his family.

What is exempt:-
Only fare charges are exempt from tax. This means that expenses such as food, hotel stay etc. not eligible for exemption.

Exemption available every year ?
No. The tax rules provide for exemption only in respect of two journeys performed in a block 
of four calendar years. This means that one can claim exemption for his travel performed in two times in a block of 4 years.

The current block runs from 2010-2013. Next block is 2014-2017. If an individual does not use his exemption during any block on any one or on both occasions, their exemption can be carried over to the next block and used in the calendar year immediately following that block.

To put it differently, if a taxpayer has not able to claim both the exemption in a block of 4 years or he has claimed only one exemption in a block of 4 years, he can carry forward the exemption to the next block and this is to be claimed in the 1st year of the next block.