Example of Leave Travel Allowance (LTA) Exemption Calculation

Example of Leave Travel Allowance (LTA) Exemption Calculation

Example of Leave Travel Allowance (LTA) Exemption Calculation

Example: Details of Mr. X for the Financial Year 2012-13

Annual Salary                                                              Rs. 6,00,000
Annual LTA                                                                   Rs.   10,000
The assessee travelled from Ahmedabad to Jaipur via Mumbai along with his wife, Father (Wholly Dependent) and the step child born on 30.09.1998 and twins born on 15.07.2001 and a child born on 31.10.2003. At the same time the Rail and Public Transport was not available from Ahmedabad to Abu due to heavy rain. The expenses incurred on such travel are as follows:
Rail fare per person from Ahmedabad to Mumbai (AC First Class)     Rs. 1000
Rail fare per person from Mumbai to Jaipur (AC First Class)                  Rs. 900
Stay Exp per person                                                                                                       Rs. 600           
Other Expenses including Food, entertainment etc.                                    Rs. 1500
Other important information:
AC First Class Rail Fare from Ahmedabad to Abu per person                Rs. 760
AC First Class Rail Fare from Abu to Jaipur per person                               Rs. 400
In addition to the above information it is also stated that Mr. X took only one journey during the last block of Four years and did not take any exemption and also it is the first journey of Mr. X during the current block of 2010-13.
Calculate amount available for exemption U/s 10(5) and also the amount that can be brought forward and carried forward.
Particulars                                                                              Amt.   

Rail Fair from Ahmedabad to Abu (Note 1) (Rs.760*6)                      Rs. 4560
Rail Fair from Abu to Jaipur (Note 1) (Rs.400*6)                     

               Rs. 2400

Total Exemption available U/s 10(5)                                          Rs. 6960
The Balance Amount Rs.3040 (Rs.10,000-Rs.6,960) is Taxable along with salary.
The assessee can carry forward the exemption of Rs. 10,000 to the First Calendar year of the next block as he has travelled only once in the current block.
In the case where he took the only single journey in the previous block he cannot Brought Forward any exemption   as the First Calendar Year of the current year has lapsed.

1)      Even when Mr. X has travelled to Jaipur Via Mumbai the fare of the same will not be allowed as an exemption. The exemption is available only on the fare by shortest distance as per the act and in case where there is an absence of the recognized public transport system, AC First Class Rail Fare for the distance of the journey by the shortest route, as if the journey has been performed by rail. The second thing is fare of only 6 people are only considered as only children born after 01.10.1998 are considered including Step Child and Adopted Child as children born out of multiple births (i.e. twins, triplets, quadruplets, etc.) after the first child will be treated as single child but the same would not be in the case when there are already multiple children at first, so exemption could not be availed on last child born on 31.10.2003.
Certain Points regarding Expert Knowledge:

          It was heard in the case of PSU Bank Employee v/s Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) that, if the employee is travelling by air across India, the air ticket should only comprise of air fare paid for travelling in India and must not include any fare for travelling overseas to avail exemption on Leave Travel Allowance received from Employer and also added that exemption will not be provided even if the Air fare for reaching at Indian desination is disclosed separately in the Air Ticket i.e. exemption is not available on the entire cost including foreign travel as well as on amount paid for partial Indian Travel.

     In case of restriction of travelling with the number of children born after 1.10.1998, children born out of multiple births (i.e. twins, triplets, quadruplets, etc.) after the first child will be treated as a single child.

      In case an assessee and his/her spouse both receive LTA they can adjust their Travel allowance and can travel every year as they can avail total 4 exemptions twice for both in a block of four years. But they both cannot take an exemption for a single journey

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