Do you know that taking a trip can help you decrease your tax liability? Now that sounds a bit confusing, right? But it is actually true and employees can get this access by claiming ‘Leave Travel Allowance’ (LTA). LTA is an allowance that the employees receive and they can use it while going on vacations. Sounds very interesting, right? Read on for all the details on how to use LTA to save tax.
What Is Leave Travel Allowance?
LTA is an allowance that an employee can claim while going on vacation in India. Unfortunately, one cannot use LTA exemption during internal and external travel. Employees can claim this allowance for 2 trips in 4 calendar years. Interestingly, employees get LTA exemption not only for themselves but also for their family members. Under this allowance, it is available for family members such as spouses, parents, children, and siblings as well.
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How Can Someone Claim LTA & Save Tax?
Employees who receive this allowance can use it for travelling within India. When someone is travelling to different destinations in one vacation, the allowance exemption is available for the longest journey. In simpler words, it is available for the distance from the starting place to the longest destination in the trip.
There are several criteria and requirements to get an LTA allowance. The most important aspect of claiming the allowance for travel expenses is the employee’s salary structure. The advantages of LTA are not always available for every employee if his/her salary structure does not include the LTA component.
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As we know that LTA is available for the employee’s children as well. They can use the allowance for 2 children if they are born after 1998. Also, if anyone is not using the allowance exemption for 2 travel trips between the time of 4 years provided, they can use it during the next block’s first year.
While claiming your LTA allowance, tickets and different records are important as you might need to show those. All the exemptions are subject to terms and conditions.
News source: FirstPost