Claiming LTA Deduction in Your ITR Filing Under the New Tax Regime for FY 2024-25 and Avoiding Notices

Leave Travel Allowance (LTA) is a tax benefit available to salaried employees in India, providing relief on travel expenses incurred within the country. While the benefit has been in place for many years, the introduction of the new tax regime for FY 2024-25 has brought changes to the way LTA is treated for tax purposes. If you're planning to claim LTA in your Income Tax Return (ITR), it’s essential to understand whether the new tax regime allows you to do so, and if not, what steps you can take to maximize your deductions under the old tax regime. Let us explore the process of claiming LTA, the rules that apply under both tax regimes, and how to avoid potential tax notices when filing your ITR.

---

Table of Contents

• Can You Claim LTA Deduction in Your ITR Filing Under the New Tax Regime for FY 2024-25 and Avoid Tax Notices?

• Can You Claim LTA Deduction Under the New Tax Regime for FY 2024-25?

• Key Rules for Claiming LTA Under the Old Tax Regime

• How to Claim LTA in Your ITR Filing

• How to Avoid Tax Notices When Claiming LTA?

• Conclusion

• FAQs

---

Can You Claim LTA Deduction in Your ITR Filing Under the New Tax Regime for FY 2024-25 and Avoid Tax Notices?

No, you cannot claim the Leave Travel Allowance (LTA) deduction under the new tax regime for FY 2024-25. The new tax regime (Section 115BAC) does not allow exemptions for LTA, meaning any LTA received from your employer will be fully taxable as part of your salary. To claim LTA benefits, you must opt for the old tax regime while filing your Income Tax Return (ITR) . If you want to avoid tax notices, ensure consistency between your Form 16 and ITR, submit travel proofs to your employer on time, and accurately report the LTA exemption under the old regime.

Can You Claim LTA Deduction Under the New Tax Regime for FY 2024-25?

No, you cannot claim the Leave Travel Allowance (LTA) deduction under the new tax regime for FY 2024-25. The new tax regime (Section 115BAC) offers lower tax rates but at the cost of several exemptions and deductions, including LTA. If you opt for the new tax regime, any LTA you receive from your employer will be fully taxable as part of your salary, and you cannot claim any exemptions for it. To avail of LTA benefits, you must choose the old tax regime when filing your ITR. This decision is important to make before filing your return, as switching between regimes after the year-end is not permitted.

Key Rules for Claiming LTA Under the Old Tax Regime

If you choose to file under the old tax regime, you can still claim the LTA exemption. However, there are specific rules and guidelines you must follow to ensure that you are eligible for this benefit:

Eligibility Criteria:

1. LTA is available only to salaried employees, and it must be a part of your salary structure.

   
   

2. The travel must be undertaken within India; international travel expenses do not qualify for LTA exemption.

   
   

3. The exemption covers travel costs, including air, rail, or bus tickets, for the employee and eligible family members (spouse, children, dependent parents, or siblings).

   
   

   Document Requirements:

4. Travel Proofs: You must retain original travel tickets, boarding passes for flights, and invoices from airlines or railways as proof of travel.

   
   

5. Form 12BB:: This signed form, submitted to your employer, details your claimed LTA expenses and serves as evidence of the expenditure.

   
   

   Exemption Limit:

6. The exemption is limited to the actual travel cost incurred or the amount provided by your employer, whichever is lower.

   
   

7. Expenses for accommodation, food, sightseeing, or local transport are not eligible for exemption.

   
   

   Journey Frequency:

8. You can claim LTA for a maximum of two journeys in a block of four calendar years. The current block for claiming LTA is from 2022–2025.

How to Claim LTA in Your ITR Filing

Claiming LTA in your ITR filing can be done efficiently, but it is important to follow the correct process to avoid complications:

Submit Proof to Employer:

1. Ideally, you should submit all necessary travel documents (tickets, boarding passes) and Form 12BB to your employer within the financial year. This ensures that the LTA is reflected in your Form 16 as an exempt income.

   
   

   Claim LTA in Your ITR:

2. If you missed submitting LTA documents to your employer and the amount is still part of your salary, you can claim the exemption directly in your ITR.

   
   

3. Under the old tax regime, LTA should be entered under Section 10(5) in the "Exempt Income" section of either ITR-1 or ITR-2, depending on your income details.

   
   

4. Caution: If the LTA is not reflected in your Form 16, it can trigger discrepancies and possibly raise a tax notice.

   
   

   Retain Documents:

5. It’s essential to retain all supporting documents (such as travel proofs and Form 12BB) for at least six years in case the Income Tax Department requests them during an audit or scrutiny. This ensures you can back up your claims in case of a tax notice.

How to avoid Tax Notices When Claiming LTA?

Claiming Leave Travel Allowance (LTA) in your Income Tax Return (ITR) can be beneficial, but it's important to follow the proper procedures to avoid tax notices from the Income Tax Department. A mismatch between your filed return and the supporting documents or Form 16 can trigger an audit or a scrutiny notice. To ensure that your LTA claim is valid and to avoid unnecessary complications, follow these steps:

1. Ensure Consistency

The first and most important step in avoiding tax notices is to ensure that the LTA exemption claimed in your ITR matches exactly with the details in your Form 16. Form 16 is a document issued by your employer that summarizes your salary, tax deductions, and other exemptions for the financial year. If the LTA amount in your ITR differs from what is shown in your Form 16, this can raise red flags with the Income Tax Department. Discrepancies between the information submitted by your employer and the details in your ITR can trigger a tax notice, as it suggests that there may be a mistake or misreporting of income. Therefore, it is crucial to cross-check your Form 16 with your ITR before filing to ensure consistency. This will help in keeping the process smooth and prevent unnecessary scrutiny.

2. Submit Documents on Time

To avoid issues with your LTA exemption, it is essential to submit your travel proofs and Form 12BB to your employer well before the deadline. Form 12BB is used to declare and substantiate your tax exemptions, including LTA. If you submit the documents after the employer’s deadline, the LTA may not be reflected in your Form 16 correctly. This can result in discrepancies between your ITR and Form 16, increasing the chances of a notice. By submitting the required documentation early, you allow your employer sufficient time to process the exemption and ensure that your Form 16 reflects accurate details. Always check with your employer about the timeline for submitting travel proofs and ensure that everything is in order well before the year-end.

3. Opt for the Correct Tax Regime

If you want to claim LTA, you must ensure that you are filing your ITR under the old tax regime. The new tax regime, which offers lower tax rates but eliminates most exemptions and deductions, does not allow you to claim the LTA deduction. If you opt for the new regime, any LTA received from your employer will be fully taxable, and you will not be able to claim the exemption. Even if you initially opted for the new regime with your employer, you can choose to file under the old regime while submitting your ITR. However, it is important to make this decision before filing the return, as switching between tax regimes after the financial year is not permitted. Carefully consider which regime provides the best benefit to you, especially if LTA is a significant tax-saving tool.

4. Claim Only Eligible Expenses

When claiming LTA, ensure that you only claim eligible travel expenses. LTA exemptions apply only to travel costs incurred for the employee and eligible family members (spouse, children, dependent parents, or siblings). The exemption is limited to the actual cost of tickets for travel by air, rail, or bus. It does not cover expenses related to accommodation, meals, sightseeing, or local transport. Misclaiming expenses outside the scope of the exemption could lead to a tax notice for incorrect reporting. Therefore, when claiming LTA, stick to the actual travel expenses incurred for you and your eligible family members. Always double-check the receipts and documents to ensure that only the valid travel expenses are claimed.

By following these steps, ensuring consistency with your Form 16, submitting documents on time, opting for the correct tax regime, and claiming only eligible expenses, you can significantly reduce the chances of receiving a tax notice for your LTA claim. This will make your tax filing process smoother and keep you compliant with the tax regulations.

Conclusion

Claiming LTA deduction can be a significant tax-saving opportunity, but it’s important to carefully consider your tax regime and follow the correct process. Under the new tax regime, LTA benefits are unavailable, so opting for the old regime is essential if you want to avail of this deduction. Ensure timely submission of documents to your employer and match your ITR details with your Form 16 to avoid any discrepancies that could lead to a tax notice. For anyone looking for assistance in tax filing, I highly recommend you download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

1. Can I claim LTA under the new tax regime for FY 2024-25?

   No, LTA exemption is not available under the new tax regime. If you opt for the new tax regime, the entire LTA received from your employer will be fully taxable as part of your salary.

   
   

2. What if I missed submitting LTA documents to my employer?

   You can still claim LTA in your ITR if you missed submitting the necessary documents to your employer. However, this may cause a mismatch between the LTA reflected in your Form 16 and your ITR, potentially triggering a tax notice from the Income Tax Department.

   
   

3. Can I switch from the new to the old regime to claim LTA?

   Yes, you can switch from the new tax regime to the old regime while filing your ITR. If you wish to claim LTA benefits, it is crucial to choose the old regime during your ITR filing, even if you initially opted for the new regime with your employer.

   
   

4. What documents do I need to claim LTA?

   To claim LTA, you must provide the following documents:

   Original tickets (flight, train, or bus) showing passenger details.

   Boarding passes for flights.

   Invoices from airlines or railways as proof of travel expenses.

   A signed Form 12BB submitted to your employer.

   
   

5. How can TaxBuddy assist with LTA claims and tax notices?

   TaxBuddy’s app provides expert assistance for accurately filing your ITR, ensuring that LTA claims are properly reported. The app also tracks notices and helps resolve discrepancies to ensure your filings are compliant and avoid penalties.

   
   

6. How often can I claim LTA in a block period?

   LTA can be claimed for a maximum of two journeys within a block of four calendar years. For the current block, which spans from 2022 to 2025, you can claim LTA for two journeys made within this time frame.

   
   

7. Can I claim LTA for international travel?

   No, LTA exemption is only applicable for travel within India. Expenses for international travel, including flights, accommodations, and sightseeing, are not eligible for the LTA deduction.

   
   

8. What if my LTA claim is more than the amount provided by my employer?

   If the LTA you claim exceeds the amount provided by your employer, the excess will be taxable as part of your salary. The exemption is limited to the lower of the actual travel costs or the amount provided by your employer.

   
   

9. Is there a time limit for submitting LTA claims to my employer?

   Yes, there is a time limit for submitting LTA claims. Make sure to submit your travel documents and Form 12BB to your employer within the financial year to ensure the exemption is reflected in your Form 16. Failure to do so may result in difficulties when filing your ITR.

   
   

10. Can I claim LTA for my family members?

    Yes, LTA can be claimed for the employee and their eligible family members, including the spouse, children, dependent parents, and siblings, provided the travel expenses are incurred for these family members.

    
    

11. What is Form 12BB, and why is it required for claiming LTA?

    Form 12BB is a declaration form where you provide details of your claimed exemptions, including LTA. It is submitted to your employer as evidence of the expenses incurred and helps ensure that your LTA exemption is reflected correctly in your salary calculations and Form 16.

    
    

12. How does TaxBuddy help in filing an accurate ITR with LTA claims?

    TaxBuddy helps by offering an intuitive platform where you can easily upload your travel proofs and documents. The app ensures your LTA claims are properly reported, reducing the risk of mismatches in your ITR and Form 16. It also provides expert guidance, ensuring you file accurately and avoid any penalties or notices.