How to Claim LTA Deduction in Your ITR and Handle Scrutiny Notices for Incorrect Claims

Leave Travel Allowance (LTA) is a valuable exemption available to salaried employees under Section 10(5) of the Income Tax Act. It allows tax exemption for travel within India, provided specific conditions are met. But with evolving tax regimes and automated scrutiny systems, even minor mismatches in LTA claims can attract attention from the Income Tax Department. Many taxpayers overlook crucial documentation, regime applicability, or employer reporting requirements, resulting in denied exemptions or scrutiny notices. Understanding how to claim LTA accurately in your ITR and avoid penalties is essential for maintaining tax compliance and maximizing savings.

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Table of Contents

How to Claim LTA Deduction in Your ITR

Is LTA Deduction Allowed in the New Tax Regime?

How LTA Works in the Old Tax Regime

Documents Required to Claim LTA in ITR

Common Mistakes That Trigger LTA Scrutiny Notices

How to Respond to Scrutiny Notices for Incorrect LTA Claims

Final Checklist for a Safe and Valid LTA Claim

Conclusion

FAQs

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How to Claim LTA Deduction in Your ITR

Claiming LTA begins at the employer level. Travel must be undertaken during sanctioned leave and within India—international journeys aren’t eligible. Only actual transport expenses—like flight, train, or government-approved bus fares—qualify. After the trip:

• Collect tickets, boarding passes, and payment proofs.

• Submit a signed Form 12BB along with these documents to your employer.

• The employer validates and includes the exemption in your Form 16.

During ITR filing, ensure the exemption reflected in Form 16 matches your return. If the exemption was processed by the employer, it doesn’t need to be claimed separately—but you must confirm consistency to avoid discrepancies.

Is LTA Deduction Allowed in the New Tax Regime?

No. From FY 2025-26 onwards, those opting for the new tax regime under Section 115BAC will not be eligible to claim LTA deductions. The new regime offers lower slab rates in exchange for forgoing most exemptions and deductions, including LTA.

If LTA exemption is a significant part of your tax planning, evaluate whether staying under the old regime provides greater benefit before opting into the new regime while filing your ITR.

How LTA Works in the Old Tax Regime

Under the old regime, LTA is exempt from tax for up to two journeys in a block of four years, as defined by the government. For FY 2024-25, the current block is 2022–2025.

Eligibility includes:

• Travel must be within India.

• The employee must travel—claims cannot be made if only family members travel.

• Travel by private car is not allowed unless public transport is unavailable.

• The exemption covers only the actual fare, not hotel, food, or sightseeing costs.

The employer processes the claim if documents are submitted on time. The exemption appears in Form 16, which should align with the data in your ITR.

Documents Required to Claim LTA in ITR

Accuracy and documentation are key. The following are required for a valid LTA claim:

• Original travel tickets (flight, train, or bus)

• Boarding passes, if applicable

• Bills from authorized transport operators

• Payment proofs (credit card or bank statements)

• Duly filled and signed Form 12BB

• Leave approval documentation (if asked for during scrutiny)

Preserving these records for at least six years is recommended, even if your claim goes unchallenged initially.

Common Mistakes That Trigger LTA Scrutiny Notices

1. Claiming LTA While Under the New Tax Regime

The new tax regime under Section 115BAC does not permit LTA exemption. However, many taxpayers mistakenly continue to include LTA deductions in their ITR even after opting into the new regime. This triggers red flags in the system, as LTA is only valid under the old regime. Such claims are almost always disallowed during assessment and can lead to penalties or notices under Section 143(2).

2. Mismatch Between ITR and Form 16 Details

Your Form 16 issued by the employer includes all tax-exempt components of your salary, including LTA if claimed and accepted. If the LTA exemption amount entered in your ITR doesn’t match what’s recorded in Form 16, it creates a data inconsistency. The Income Tax Department’s automated systems are designed to detect such mismatches, often leading to scrutiny notices or requests for clarification.

3. Submitting Unverifiable or Incomplete Travel Documents

LTA claims must be backed by valid, original travel documents. This includes air/train/bus tickets, boarding passes, and payment receipts. Submitting scanned copies that are unclear, missing segments of a journey, or lacking payment proofs raises doubts about the authenticity of the claim. Additionally, incomplete documentation—such as missing dates or journey details—can make it difficult for assessing officers to verify the claim, increasing the likelihood of rejection or notice.

4. Claiming Travel Expenses for Non-Family Members or Non-Travelers

As per the rules under Section 10(5), LTA can only be claimed for travel expenses incurred by the employee, their spouse, children, and dependent parents or siblings. Attempting to claim LTA for friends, distant relatives, or household help is not permissible. Similarly, if the employee did not personally undertake the travel and only their family did, the exemption cannot be claimed. Claims of this nature often result in immediate rejection and may be flagged for further review.

5. Attempting to Claim Foreign Travel Expenses

LTA strictly applies to domestic travel within India. Some employees wrongly assume that international travel during leave can be claimed under LTA, especially if booked under the same itinerary or expense account. This misunderstanding leads to non-compliance. Any portion of the expense attributed to foreign destinations is disallowed and, if not corrected, could trigger a detailed scrutiny.

6. Not Preserving Original Tickets or Proof of Payment

Failing to maintain a physical or digital record of original travel documents is a critical error. In the event of a notice or inquiry, the burden of proof lies on the taxpayer. If you cannot furnish original tickets, boarding passes, or evidence of payment—such as bank statements or credit card receipts—the LTA claim is likely to be disallowed. Income Tax authorities may treat such claims as unverifiable, regardless of intent.

7. Unintentional Inconsistencies or Clerical Errors

Even genuine taxpayers may face scrutiny due to small inconsistencies, such as date mismatches between tickets and leave records, overlapping travel claims, or duplicate entries. Although these may result from clerical errors, the Income Tax Department’s automated systems may still flag them for review. If found invalid during scrutiny, such inconsistencies can lead to exemption denial and penalties.

Each of these errors—intentional or not—can attract scrutiny under Section 143(2), which deals with the detailed assessment of returns. Ensuring accuracy, clarity, and supporting documentation is key to avoiding notices and maintaining compliance.

How to Respond to Scrutiny Notices for Incorrect LTA Claims

If you receive a scrutiny notice questioning your LTA claim, take the following steps promptly:

• Read the notice carefully to understand the nature and scope of the inquiry.

• Compile all relevant documents—tickets, Form 12BB, employer communication, and proof of payment.

• Respond within the deadline specified in the notice. Use the income tax e-filing portal to submit your reply and documents.

• Be cooperative and transparent during proceedings, whether online or during personal hearings.

• If the exemption is disallowed but was claimed in good faith, you may:

• Accept the order and pay any tax dues, or

• File an appeal or request rectification for factual errors.

Using a professional tax platform like TaxBuddy can ease this process by organizing your claim history and supporting documentation in one place.

Final Checklist for a Safe and Valid LTA Claim

• Opted for the old tax regime

• Travel was domestic and during approved leave

• Original travel tickets and payment proofs preserved

• Submitted Form 12BB and documents to employer

• LTA exemption reflected in Form 16

• ITR matches employer data exactly

• No duplicate or inflated claims made

• Backup documents stored securely for future reference

Conclusion

Filing an LTA exemption may seem straightforward, but the risk of scrutiny increases with mismatches, regime confusion, or missing paperwork. For accurate tax filing, compliance with exemption rules, and avoiding costly notices, it's crucial to stay organized and informed. Platforms like TaxBuddy offer seamless support—ensuring that your LTA claim is valid, verified, and backed by experts. For anyone looking for assistance in tax filing, it is recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?

TaxBuddy offers flexibility based on your tax complexity and comfort level. You can choose the self-filing plan, which allows you to file your Income Tax Return on your own using their smart, AI-driven platform. Alternatively, you can opt for expert-assisted filing, where a tax expert reviews your case, handles documentation, and ensures your filing is accurate and compliant. This dual-option system makes TaxBuddy suitable for both salaried individuals and professionals with complex tax scenarios.

Q2. Which is the best site to file ITR?

While the official Income Tax Department portal is the default platform, many taxpayers prefer intuitive platforms like TaxBuddy for its ease of use, real-time error detection, and helpful features. TaxBuddy combines AI-driven suggestions with human expertise to minimize filing errors and ensure maximum tax benefits. It also provides reminders, document checklists, and instant updates on refund status, making it a top choice for ITR filing in India.

Q3. Where to file an income tax return?

You can file your ITR either on the government’s official portal https://incometax.gov.in or through third-party platforms like TaxBuddy. These platforms streamline the process, especially for those unfamiliar with tax forms or deductions. TaxBuddy, for instance, offers a mobile app and web dashboard where users can upload documents, check deductions, and submit their return—guided or independently.

Q4. Can I claim LTA for international travel?

No. LTA (Leave Travel Allowance) exemptions are strictly limited to domestic travel within India. This includes travel by air, rail, or public transport to any destination within the country. International trips, even if undertaken during official leave, do not qualify for exemption under Section 10(5) of the Income Tax Act. Submitting such claims may lead to rejection or a scrutiny notice.

Q5. What if my LTA claim in ITR doesn’t match Form 16?

Any mismatch between the LTA exemption claimed in your ITR and the amount shown in your Form 16 can attract scrutiny. This often happens when employees attempt to claim LTA independently after the employer has finalized Form 16, or if there's a clerical error. To avoid notices, always ensure that LTA claims are processed through your employer and that your return reflects the same figures.

Q6. Can I claim LTA under the new tax regime?

No. The new tax regime under Section 115BAC, applicable from FY 2025–26, does not allow exemptions like LTA. Taxpayers opting for the new regime must forgo LTA and other popular exemptions (such as HRA and standard deductions) in exchange for reduced tax rates. If LTA exemption is important for your tax planning, consider whether staying in the old regime is more beneficial before finalizing your ITR.

Q7. What documents are needed for an LTA claim?

To successfully claim LTA and withstand any scrutiny, you must maintain a proper set of documents:

• Original travel tickets (flight, train, or bus)

• Boarding passes (if applicable)

• Payment receipts or bank statements showing booking/payment details

• A signed Form 12BB submitted to your employer

• Communication proof showing leave sanction during the travel period

These documents must be preserved for at least six years from the end of the relevant assessment year.

Q8. What happens if I receive a scrutiny notice for LTA?

Receiving a scrutiny notice usually indicates that the Income Tax Department found discrepancies or requires clarification regarding your LTA claim. You must:

• Log in to the income tax portal

• Access the notice under 'e-Proceedings'

• Respond within the deadline

• Upload supporting documents like travel tickets, Form 12BB, employer letters, and payment proof

Cooperating fully and responding on time can resolve the issue smoothly. Non-response can lead to disallowance of the claim and additional tax liability.

Q9. Can I claim LTA in my ITR if the employer hasn’t processed it?

Technically, yes—but it’s risky. If your employer didn’t approve and include the LTA exemption in Form 16, you can still claim it manually in your ITR. However, this increases the chance of receiving a notice, as there’s no corresponding employer verification. Ensure you retain strong documentary evidence and be prepared to justify the claim during scrutiny.

Q10. How many times can I claim LTA in a block year?

LTA can be claimed for a maximum of two journeys in a block of four years. The government specifies these blocks—e.g., the current block is 2022–2025. If you miss claiming both journeys in a block, one unused claim can be carried forward to the next block, but it must be used in the first year of that new block.

Q11. Can both husband and wife claim LTA separately?

Yes. If both spouses are salaried employees and receive LTA as part of their salary, each can claim the exemption separately, provided they both undertake eligible travel. The key condition is that each individual must travel and maintain documentation for their respective claims. However, both cannot claim the same set of travel bills or journeys.

Q12. Is hotel accommodation included under LTA?

No. The LTA exemption only covers travel expenses—this includes the fare for air, rail, or authorized public transport. Expenses related to hotel stays, meals, sightseeing, or cab travel are not exempt, even if incurred during the same trip. Attempting to include such costs under LTA can lead to rejection of the claim or a scrutiny notice.