Leave Travel Allowance (LTA) is part of an employee’s cost-to-company (CTC). Under Section 10 (5) of the Income Tax Act (IT Act), salaried employees can claim tax exemption for expenses incurred on traveling anywhere in the country. At the same time, in view of the Corona crisis, the Center is preparing to give LTA exemption without going on any journey.
As the Corona crisis stalled due to economic activity, most companies are either making layoffs or making pay cuts. At the same time, people will also have to pay more income tax due to work from home (WFH). People are worrying about the declining income along with the fear of losing their jobs. In such a situation, if you are a salaried worker, then we are telling you to save income tax with the help of an allowance which most people do not pay attention to. If you get Leave Travel Allowance (LTA), then you can claim Income Tax Rebate on it.
Tax rebate on expenses incurred while traveling anywhere
Leave travel allowance is part of an employee’s cost-to-company (CTC). Under Section 10 (5) of the Income Tax Act (IT Act), salaried employees can claim tax exemption for traveling expenses spent anywhere in the country. To avail the tax exemption, the employee has to provide proof of his / her travel (Proofs). Employees can claim income tax exemption on LTA, if they travel anywhere in the country with themselves or family. This includes airplane, train, bus fare and hotel expenses
For exemption in income tax, employees can ask their company to change the taxable medical and transport allowance received in their salary along with tax-free perks like Newspaper and Leave Travel Allowance. Let us know that LTA tax is free if it is claimed once in a block of two years. Let’s understand it in an easy way. Suppose a person has a CTC of Rs 10–11 lakh annually. His basic salary is about 5 lakh rupees, HRA about 2.5 lakh, special allowances is about 2.25 lakh rupees.
Taxes to avoid eliminating taxable perks included in CTC
Taxpayer gets Rs 9,500 as Transport Allowance (TA) and Rs 8,000 Medical Allowances in salary. Apart from this, 6 thousand for telephone allowance, 8 thousand for fuel reimbursement and 11 thousand rupees as a coupon. At the same time, nothing is found in the form of Newspaper and LTA. The cooperation of the company in EPF is about 70 thousand rupees and no cooperation amount goes to NPS. Now for saving income tax, the employee will have to terminate his transport allowance and medical allowance from the company. Both these perks have now been included in the taxable income.
supply include CTC tax-free perks from company employees
The employee must reduce the special allowance from half to slightly more. It also comes in taxable income. At the same time, the telephone allowance will have to be doubled, Rs 3,000 as a news paper and Rs 40 thousand in LTA. These perks come in tax-free income. Along with this, the cooperation amount in NPS will have to be about 50 thousand rupees. With this, the employee will get tax exemption under Section 80 CCD (2) of the Income Tax Act. Tax will be exempted even if interest income is credited to debt fund. If an employee uses all these measures, you can save around Rs 28,000 income tax in a year.
Without going anywhere, employees will be able to claim for LTA
Till now, the employees had to be very demanding to claim LTA. They had to collect all travel bills, hotel bills and tickets so that they could be presented as evidence at the time of claim. A decrease in demand has been recorded due to corona infection. The government is considering another relief package to increase demand. It is believed that for some time, relief in tax rates can also be given. At the same time, the government is also making special plans regarding LTA. Under this, LTA can be approved to be used as a tax free coupon to buy goods. Understand in simple terms, if you are not traveling and only collect shopping coupon, then it will be considered in the travel allowance i.e. you can claim for LTA without going anywhere.