Who are considered as family members for LTC exemption?

Whether traveling alone or with family, you are still eligible for the exemption. Therefore, your employer will also reimburse the travel expenses for your family. The problem is that the term 'family' has been defined by the Income Tax Department. However, a family is defined as follows by the LTA and the Income Tax Act: Spouse; Children; Dependent parents; Dependent siblings

How many times can LTC be claimed?

A maximum of two trips may claimed for LTC within a four-year concession block. A trip can be carried over to the first calendar year of the next block if the individual hasn't claimed any LTC throughout the four-year block. We call this a carryover concession. Employees may claim LTC for their own and their families' travel expenses.

What is deemed LTC scheme?

In October 2020, the Finance Minister unveiled a new LTC program. Employees can take advantage of LTC tax breaks without having to travel. Rather, people have to spend at least three times their qualified LTC on products and services with a minimum of 12% GST. Employees must make their purchases between October 12, 2020, and March 31, 2021, to be eligible for this new program. Every time they buy goods and services, they must also obtain a GST certificate from a vendor registered with the GST, and they must only use digital payment methods for all purchases. This program, formerly exclusive to Central Government workers, is now open to workers in the private sector as well.

What is the leave travel concession block year?

The LTC benefit is available to employees for four calendar years. A block year is the collective term for these four years. The block began on January 1, 2018, and will end on December 31, 2021. Employees can plan two domestic travels in a single block and get LTC for each of these trips. The person must visit their hometown at least once during these two journeys. The employee will not be eligible to receive LTC if they do not meet these requirements. Additionally, a person may only carry one LTC-approved leave to the next block, but the trip must take place within the first year of that block. Employees can carry forward their unused second trip, but to qualify for the LTC exemptions, they must take a trip in 2022.

What is leave travel concession for central government employees?

Tax exemptions under LTC are also available to central government civil staff. All people appointed to the civil services, including those in the defence services, those working for a state government and serving on deputation to the federal government, those hired under contract, and those hired again after retiring, are covered. Individuals who are not employed full-time, those paid daily, those who receive contingency payments, railroad workers, members of the armed forces, and those who qualify for other types of travel benefits are not eligible for this benefit. Employees of the Central Government must have worked continuously for at least a year before the first suggested trip date to be eligible.

Can I claim LTC if I pay taxes as per the new tax regime?

No, LTC is taxable under the new tax regime and exempt if it decides to pay taxes under the previous one by meeting the requirements.

Is the scheme applicable to those in the concessional income tax regime?

The new concessional income tax regime has changed the tax slabs, but only if these persons choose not to make use of any deductions or exclusions permitted by the Income Tax Act of 1961. Because of this, people who have chosen the concessional income tax scheme cannot take advantage of LTC exemptions.

How much tax is saved by opting for LTC?

Tax exemptions are available to those who have not chosen to use the new income tax scheme for their LTC cash vouchers. With the aid of an example, we can comprehend the amount of tax that can be saved. The highest LTC fare is INR 36,000 per person, so an employee heads a household of four. He has Rs. 1,44,000 in total LTC. This person might save Rs. 61,556 on taxes, using the maximum marginal rate of 42.74%. To participate in the new cash voucher program, people must ensure that the products and services they buy are subject to at least 12% GST and come from a GST-registered seller. They must make all their purchases between October 12, 2020, and March 31, 2021.

What is the difference between LTA and LTC?

LTA and LTC are synonymous and refer to the same tax benefit. Leave Travel Allowance (LTA) and Leave Travel Concession (LTC) are interchangeable. In both cases, the employee's travel expenses for a holiday within India are excluded.

Is LTC exemption allowed if I opt for the new tax regime under Section 115BAC?

No, the new regime excludes LTC along with several other exemptions. You can only claim it if you opt for the old regime when filing your ITR.

Can LTC claims be made after the financial year through ITR filing?

Yes, if your employer didn't process it, you may still claim it in your return, provided you have valid travel proofs and your ITR is filed under the old regime.

Is international travel covered under LTC exemption?

No, LTC strictly applies to travel within India. Even if part of the ticket is booked in India for international travel, the entire claim is disallowed.

Can both spouses claim LTC for the same family trip?

Yes, but they must divide the claim among different family members. Both cannot claim for the same individuals under the same journey.

Is travel to hometown covered differently under LTC rules?

Travel to your declared hometown is allowed once a year as a part of the LTC block. Separate rules apply if you're claiming for a broader vacation instead.

Do I need boarding passes and hotel bills for LTC claim?

You must retain boarding passes and travel tickets as proof. Hotel bills aren’t mandatory unless your employer requires it or you're clubbing with leave.

How is LTC affected by SFT and high-value transaction reporting?

While LTC isn’t directly reported under SFT, frequent high-value travel claims without proportionate salary may raise red flags during assessment.

What if the LTC amount claimed is later rejected by the employer?

The rejected amount will be taxed as a perquisite and added to your income in Form 16. You must ensure it’s accurately reflected in your ITR.

Can I claim LTC in a year I don’t take actual leave?

No, one of the core conditions for LTC is that it must be availed during actual leave taken. Fake leave records can lead to tax implications and penalties.

Can I claim LTC exemption if I travel by personal vehicle?

LTC is allowed only if the mode of transport is recognized by the government (railways, airlines, state transport buses). Private vehicles are not eligible.

How is LTC treated in ITR if already processed by the employer?

It will appear as exempt income under Section 10(5) in Form 16 and auto-reflected in pre-filled ITR forms. Cross-verify with actual documents for accuracy.

What happens if I miss claiming LTC within the block year?

You can carry it forward for one year as a grace period. If not claimed in that period, the exemption lapses permanently.

Does LTC exemption impact HRA or other salary components?

No, LTC is a separate exemption. However, incorrect declaration can cause discrepancies across Form 16 and lead to mismatches in Form 26AS or AIS.

Is there a separate column to declare LTC in ITR forms?

No separate column exists in ITR for LTC, but it should be mentioned as part of exempt allowances under salary income.

Are there different LTC rules for central and state government employees?

While basic principles under Section 10(5) apply to all, government employees often follow more detailed LTC schemes with stricter documentation and periodicity.

Leave Travel Concession: A Detailed Guide

Nimisha Panda
May 6
9 min read

Updated: May 7

An allowance provided by an employer to an employee to cover travel expenditures while on leave is known as a leave travel concession. The Income Tax Act exempts leave travel concessions from taxes. A few requirements must be met before the exemption is granted. This article discusses the leave travel concession applicable under the Income Tax Act.

What is Leave Travel Concession?

Eligibility for Leave Travel Concession

Exemption for Leave Travel Concession

Air Travel

Origin and Destination Locations Rail Connected

Origin and destination locations are not rail-connected

How to Claim Leave Travel Concession

Family and Children

Conclusion

Most Asked Questions

What is Leave Travel Concession?

As the name implies, Leave Travel Concession (LTC) is a benefit provided to salaried employees that facilitates their domestic travel. Employees receive LTC benefits for two travels over four years. Because of this, salaried workers may now effortlessly and affordably go to their hometowns and other domestic destinations without having to take out a loan or save a significant amount of money. According to the Income Tax Act of 1961, an individual may be exempt from taxes under LTC up to Rs. 36,000. The employee would only be exempt from taxes if they provided travel invoices totaling Rs. 20,000. The Government of India recently modified the LTC regulations in light of the COVID-19 travel limitations and to stimulate the economy during the holiday season. The Ministry of Finance announced in October 2020 that people can now get the maximum exemption of Rs. 36,000 without showing travel bills, provided they spend thrice that amount on goods or services that require 12% or more GST. Employees who wish to take advantage of this perk must provide the required invoices and GST certificates and make all payments online. Former employers may also grant LTC exemptions to retired people or those who have experienced termination of service.

Eligibility for Leave Travel Concession

Requests for LTC are open to all employees who have worked continuously for at least a year. The LTC benefit is available to employees' wives and children who are dependent. Sadly, those wives employed with National Airlines or Indian Railways are ineligible. Only employees who have not yet taken advantage of the tax benefit exemption for the January 2018–December 2021 period are eligible for the current cash voucher program. Employees must spend at least three times the fare amount they are eligible to receive to qualify for the maximum tax benefit under this scheme. A proportionate tax exemption may be obtained where this sum fails to get spent. Eligible purchases must made between October 12, 2020, and March 31, 2021. In addition to submitting a GST certificate demonstrating a minimum GST of 12%, certain products and services must be paid for digitally. No tax exemptions under LTC will be available to those who opt for the new income tax regime.

Exemption for Leave Travel Concession

The maximum exemption for leave travel should not be greater than the actual cost of the trip. Only the travel fare is eligible for the leave travel concession exemption. Expenses for boarding and lodging, transportation from one's home to the destination of travel made for work or otherwise, porterage, and other journey-related costs will not be eligible for an exemption. The following also affects the amount of the leave travel concession exemption:

Air Travel

The maximum exemption permitted for travel by an employee and their family is no more than the National Carrier's air economy cost for the quickest route to the specified location.

Origin and Destination Locations Rail Connected

The maximum exemption shall be restricted to the price of an air-conditioned first-class rail fare via the quickest route if the journey's origin and destination connect by rail and the trip is by any means other than air.

Origin and destination locations are not rail-connected

The following is the amount of exemption for leave travel concession if the journey's origin and destination do not intersect by rail:

An amount that does not surpass the first or deluxe-class fare on a recognized public transportation system using the shortest route.
An amount equal to the air-conditioned first-class rail fare for the distance traveled via the shortest route as if the trip had been completed by rail if there is no recognized public transportation system.

How to Claim Leave Travel Concession

Any two trips within four years may qualify for a taxpayer's leave travel concession. The taxpayer may claim the exemption for the first trip in the calendar year that follows the end of the block of four calendar years if he has not used the exemption for leave travel concession in that block. Because of this, unless the time frame gets extended, only one voyage can be carried forward, and that is only for the first journey in the subsequent calendar year. The full amount received by the employee will be taxed if the leave travel concession gets deposited before the trip ends.

Family and Children

Travel concessions for leave can apply to the ticket cost paid for two children and family members. For this context, family means:

Spouse and offspring of the worker. Up to a person's two children after 1.10.1998. Children born before 1.10.1998 and children born after one will not be subject to the restriction restricting the number of children.
Parents, siblings, and siblings who are dependent on the worker.

Conclusion

When an employee goes on leave, retires, or has his employment terminated, his company may grant him a leave travel concession, which allows him to travel anywhere in India. Even though it seems straightforward, there are many considerations to make before attempting to claim an LTC exemption. The guidelines for obtaining an LTC exemption are outlined in the tax provision and explained thoroughly in this article.

FAQ

Who are considered as family members for LTC exemption?
Whether traveling alone or with family, you are still eligible for the exemption. Therefore, your employer will also reimburse the travel expenses for your family. The problem is that the term "family" has been defined by the Income Tax Department. However, a family is defined as follows by the LTA and the Income Tax Act:
- Spouse;
- Children;
- Dependent parents;
- Dependent siblings
How many times can LTC be claimed?
A maximum of two trips may claimed for LTC within a four-year concession block. A trip can be carried over to the first calendar year of the next block if the individual hasn't claimed any LTC throughout the four-year block. We call this a carryover concession. Employees may claim LTC for their own and their families' travel expenses.
What is deemed LTC scheme?
In October 2020, the Finance Minister unveiled a new LTC program. Employees can take advantage of LTC tax breaks without having to travel. Rather, people have to spend at least three times their qualified LTC on products and services with a minimum of 12% GST. Employees must make their purchases between October 12, 2020, and March 31, 2021, to be eligible for this new program. Every time they buy goods and services, they must also obtain a GST certificate from a vendor registered with the GST, and they must only use digital payment methods for all purchases. This program, formerly exclusive to Central Government workers, is now open to workers in the private sector as well.
What is the leave travel concession block year?
The LTC benefit is available to employees for four calendar years. A block year is the collective term for these four years. The block began on January 1, 2018, and will end on December 31, 2021. Employees can plan two domestic travels in a single block and get LTC for each of these trips. The person must visit their hometown at least once during these two journeys. The employee will not be eligible to receive LTC if they do not meet these requirements. Additionally, a person may only carry one LTC-approved leave to the next block, but the trip must take place within the first year of that block. Employees can carry forward their unused second trip, but to qualify for the LTC exemptions, they must take a trip in 2022.
What is leave travel concession for central government employees?
Tax exemptions under LTC are also available to central government civil staff. All people appointed to the civil services, including those in the defence services, those working for a state government and serving on deputation to the federal government, those hired under contract, and those hired again after retiring, are covered. Individuals who are not employed full-time, those paid daily, those who receive contingency payments, railroad workers, members of the armed forces, and those who qualify for other types of travel benefits are not eligible for this benefit. Employees of the Central Government must have worked continuously for at least a year before the first suggested trip date to be eligible.
Can I claim LTC if I pay taxes as per the new tax regime?
No, LTC is taxable under the new tax regime and exempt if it decides to pay taxes under the previous one by meeting the requirements.
Is the scheme applicable to those in the concessional income tax regime?
The new concessional income tax regime has changed the tax slabs, but only if these persons choose not to make use of any deductions or exclusions permitted by the Income Tax Act of 1961. Because of this, people who have chosen the concessional income tax scheme cannot take advantage of LTC exemptions.
How much tax is saved by opting for LTC?
Tax exemptions are available to those who have not chosen to use the new income tax scheme for their LTC cash vouchers. With the aid of an example, we can comprehend the amount of tax that can be saved. The highest LTC fare is INR 36,000 per person, so an employee heads a household of four. He has Rs. 1,44,000 in total LTC. This person might save Rs. 61,556 on taxes, using the maximum marginal rate of 42.74%. To participate in the new cash voucher program, people must ensure that the products and services they buy are subject to at least 12% GST and come from a GST-registered seller. They must make all their purchases between October 12, 2020, and March 31, 2021.
What is the difference between LTA and LTC?
LTA and LTC are synonymous and refer to the same tax benefit. Leave Travel Allowance (LTA) and Leave Travel Concession (LTC) are interchangeable. In both cases, the employee's travel expenses for a holiday within India are excluded.
Is LTC exemption allowed if I opt for the new tax regime under Section 115BAC?
No, the new regime excludes LTC along with several other exemptions. You can only claim it if you opt for the old regime when filing your ITR.
Can LTC claims be made after the financial year through ITR filing?
Yes, if your employer didn't process it, you may still claim it in your return, provided you have valid travel proofs and your ITR is filed under the old regime.
Is international travel covered under LTC exemption?
No, LTC strictly applies to travel within India. Even if part of the ticket is booked in India for international travel, the entire claim is disallowed.
Can both spouses claim LTC for the same family trip?
Yes, but they must divide the claim among different family members. Both cannot claim for the same individuals under the same journey.
Is travel to hometown covered differently under LTC rules?
Travel to your declared hometown is allowed once a year as a part of the LTC block. Separate rules apply if you're claiming for a broader vacation instead.
Do I need boarding passes and hotel bills for LTC claim?
You must retain boarding passes and travel tickets as proof. Hotel bills aren’t mandatory unless your employer requires it or you're clubbing with leave.
How is LTC affected by SFT and high-value transaction reporting?
While LTC isn’t directly reported under SFT, frequent high-value travel claims without proportionate salary may raise red flags during assessment.
What if the LTC amount claimed is later rejected by the employer?
The rejected amount will be taxed as a perquisite and added to your income in Form 16. You must ensure it’s accurately reflected in your ITR.
Can I claim LTC in a year I don’t take actual leave?
No, one of the core conditions for LTC is that it must be availed during actual leave taken. Fake leave records can lead to tax implications and penalties.
Can I claim LTC exemption if I travel by personal vehicle?
LTC is allowed only if the mode of transport is recognized by the government (railways, airlines, state transport buses). Private vehicles are not eligible.
How is LTC treated in ITR if already processed by the employer?
It will appear as exempt income under Section 10(5) in Form 16 and auto-reflected in pre-filled ITR forms. Cross-verify with actual documents for accuracy.
What happens if I miss claiming LTC within the block year?
You can carry it forward for one year as a grace period. If not claimed in that period, the exemption lapses permanently.
Does LTC exemption impact HRA or other salary components?
No, LTC is a separate exemption. However, incorrect declaration can cause discrepancies across Form 16 and lead to mismatches in Form 26AS or AIS.
Is there a separate column to declare LTC in ITR forms?
No separate column exists in ITR for LTC, but it should be mentioned as part of exempt allowances under salary income.
Are there different LTC rules for central and state government employees?
While basic principles under Section 10(5) apply to all, government employees often follow more detailed LTC schemes with stricter documentation and periodicity.