What Is Leave Travel Allowance?
Leave Travel Allowance (LTA) is a salary component provided by employers to cover an employee's travel expenses incurred while on leave, within India — eligible for tax exemption under Section 10(5) of the Income Tax Act, 1961, subject to specific conditions and limits.
LTA Exemption Rules
- Exemption covers actual travel costs only (air, rail, or bus fare) — not accommodation, food, or other trip-related expenses
- Available for travel within India only; international travel doesn't qualify for LTA exemption
- Exemption is available for a maximum of two journeys within a block of four calendar years, as defined by the government
- The exemption amount is limited to the actual LTA received or the actual eligible travel cost incurred, whichever is lower
How to Claim LTA Exemption
- Undertake eligible domestic travel during the leave period
- Retain travel proof (tickets, boarding passes, or travel agency invoices) as supporting documentation
- Submit the LTA claim with supporting proof to the employer, typically as part of the Form 12BB submission process
- The employer verifies and applies the exemption when calculating TDS
LTA Block Year System
LTA exemption operates on a government-defined block of four calendar years (not the financial year), within which an employee can claim exemption for up to two journeys — unclaimed LTA exemption for a specific journey generally cannot be carried forward beyond a limited carryover provision to the immediately following block.
Why LTA Matters for HR and Payroll
Correctly structuring LTA within CTC and properly verifying travel proof against claims helps employees legitimately optimize their tax position, while ensuring payroll compliance requires careful adherence to the specific exemption conditions and documentation requirements.
Leave Travel Allowance (LTA): Frequently Asked Questions
Is LTA exemption available under the new tax regime?
Can LTA be claimed for international travel?
This glossary entry is for general information and reflects common HR practice in India at the time of writing. Statutory thresholds, rates and deadlines change — verify against the latest official notifications or consult a qualified legal or tax advisor before acting.