As we are in mid Feb of the year and its tax time , i thought to talk a bit on LTA and Medical reimbursement benefits .Though many of you might already know about it , let me go over it in brief for readers who have less knowledge about it .
You have a limit up to which you can claim your spent amount on LTA and medical bills and save tax on that part . If you dint claim it, for that much amount you will be taxed .
Limit for LTA : 50,000 per year
Limit for Medical Bills : Rs 15,000 per year
So from your total salary , you can save tax on this 65000 if you want , if you dont claim it , you will have to pay tax on this part .
What is LTA ?
LTA is Leave Travel allowance , is the benefit given to a salaried employee . You can claim travel expenses from any one journey in a year .
- There is a block of 4 yrs decided by govt ( current block is 2006-2009) . In a block you can claim LTA any two years . for other 2 yrs you cant claim it , so total 50,000 will be taxable in those 2 yrs .
- You can carry 1 LTA claim for next block , which you have to claim in the first year of next block .
- You cant claim LTA 2 times in a year .
- These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).
- If your LTA is not utilised, it gets added to your salary and you will be taxed on it.
- LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.- The entire cost of the holiday is not covered. Only the travel costs are covered. So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.
Medical Reimbursement
You can also claim deductions on the medical bills for medicines and doctor visits . You just have to get the bills and submit a proofs .
The bills can be in the name of you or your dependents .
Final Note : Utilising this benefit just requires you to keep the documents ready . many people do not claim this benefit because they are too lazy of keep the documents safe . Don’t be lazy …
{ 51 comments… read them below or add one }
A few days back there was a news – we don’t have to submit the proof of travel for claiming LTA. However if asked by the IT dept we have to show it. Now I am hearing from my company CA that we can’t claim expenses incurred in Private Travel (Cars, Van’s taken on rent) in LTA. Is it true?
Madhab
Madhab
As per my knowledge Travel expenses should be covered . Ask your CA why its not covered ?
Also travel proofs may still be required for quite some time ,. I have no much idea why
Manish,
My company provides me LTA equal to my basic salary. I also have the option to increase or decrease my LTA amount for the year. Based on what to you said above, do you mean that i can increase this amount till 50k for me to get full tax exemption on it ?
However, similar to madhab, my employer says that even if i travel on a public transport like a four wheeler SUV and spend an amount of 50k, i will only be given tax exemption only the charge equal to the amount of to and fro first class train fares from the source and destination for me and my dependants. Is this justified?
Shantharam
Shantharam
50k limit is from govt .Some employers lessen this amount as majority is not able to use it fully .
Regarding your question on public travel , you should be able to claim travel cost (cost of petrol) . One of my friend has recently done that and he faced no issues from his employer .
Manish
hi
I am silent reader of your blog . Your blogs really helps me to increase my financial knowledge . I have a dbt .
If I carry forward one of my LTAs(from the current block) to next block(2010-2013) and claim it in 2010, tax relaxation will be based on which year’s income? 2009 or 2010
Roshan
Nice to get a comment from you . The tax relaxation will always be for the year in which you claim it, carry forward does not mean that you can produce the bills for last year , its just the carry forward of the chance of claiming it .
Manish
Dear Manish,
I am really very thankful to you to introduce such informative blog on financial matters. I got this blog link from one of my friend when i was trying to get rid of some small financial issues and confusion on such matters. now i have a good and clear points on some financial matters, what i read on this blog… so thanks again…
Now I have a small question on this matter as you pointed out that we can claim LTA only two times in 4 year block to get tax exemption and if left one claim on current 4 year block then can carry forward for next 4 year block but must be claimed in 1st year of next block. Rite? so my question is that in next 4 year block, we can claim LTA 3 times, Rite? and it’s only applicable when you left your claim in your last block.
and other confusion on your point: “- There is a block of 4 yrs decided by govt ( current block is 2006-2009) . In a block you can claim LTA any two years . for other 2 yrs you cant claim it , so total 50,000 will be taxable in those 2 yrs .”
if we have 50K for 1 year LTA claim means 2Lac for 4 year and
if we claim 50k in 1st yr and 50k in 2nd yr and we can’t claim for our 1Lac.. rite.? but you said that “so total 50k will be taxable in those 2yrs”… may be i am not getting your point or correct me.
Regards,
Pavan
Pavan
Thanks for asking , Lets take it one by one
1. Yes you can claim LTA 3 times in 4 yr block if you dont utilize all of them in the last block . But one of them has to be claimed in first year
2. 50k is exemption for 1 yr , which means you can get exemption of total 1 lac in 4 yrs block , which is 50k each in 2 yrs .
Note that exemption means we save tax on that much amount , we get the money anyways . SO you will get 50k as LTA in each 4 yrs just that for 2 yrs you will save tax on that, and for rest 2 yrs you will pay tax on that 50k .
I hope its clear now , else ask again
Manish
that’s g8.. thanks,…. Clear now..
Pavan
Hi,
for the LTA claim, is an award miles based air ticket also valid ?
Is the boarding pass necessary ?
G Dutt
You need to submit the boarding pass , its mandatory . Award miles based ait tickets are not valid , because its not something you paid money for, its a benefit from company side
Keep coming , nice to see your first comment .
Manish
Hi,
I would like to know what does dependant exactly mean here?? Is it financially dependant? If yes, then what level of annual income is required to define a person as independant? In other words, when can I say my parents are dependant on me as they will always have some source of income.
Awaiting a prompt response,
Thanks,
Jay
Jay
by dependent we mean “financial dependent” only . So the level of insurance taken has to be inline with the depth of financial dependency , If your parents have source of income , and they can take care of themselves , then you dont have to take any insurance .
Manish
Can a company define below LTA policy:
1) LTA amount will be paid only for Level/Grade 4 and above employees.
2) LTA amount will be paid to employees below Level/Grade 4 after been with the company for one year (But the company offer letter says LTA(Grade-Wise Fixed Anual Benifit)
I am a grade 2 employee, I am not willing to use LTA at all. But company is not paying me that amount as part of monthly salary on pro-rata basis. Company policy says G2 employee cannot not claim LTA in the first year (Means LTA will be given, but after taxing it that to after one year).
I dont have any problem with tax, I am ready to pay tax monthly if i get the LTA pro-rata amount in my salary itself.
My question is can a company
a) Define different LTA rules based on employee grades?
b) Say, LTA will not be given (as claims/not claims) to G2 employee in first year of the employment?
Please give clarity on this.
Franklin
I believe they can , Will have to find out more on this .
Manish
As far as i know, giving leave travel allowance (LTA) is a prerogative of the company, as a perquisite or a social welfare benefit. If it is given in the form of LTA then it may be tax free under certain conditions.
Sunil
thanks for the information .
Manish
I know it is important to show that the employee was not attending office for the period that he claimed his LTA. However, is it mandatory to use ELs (Earned Leaves) to claim LTA? I had a few CLs and Compansatory Offs (offs in lieu of working on off days) that I wanted to use. Can I use those or is it mandatory to use my ELs?
Sanjay
I am not sure on this, however you should have taken the leave , any leave is ok i guess .
Manish
Hi Sanjay n Manish… I checked with my Accounts deptt… We’ve to take only ELs or PLs for claiming LTA…
In that case you have to take those only
Can LTA be claimed only for Travel on Shortest route ?
For ( e.g)
1.)If i am going to Shirdi from Chennai Taking a day trip on Hyderabad on a Private A/C INNOVA Car can the total travel cost be taken for Tax Free.
2.)My Driver bata comes under Tax Free or not ?
Not sure
Can one cliam LTA for international tour
NO
If the LTA amount gets increased in the middle of the year, will the new LTA be applicable for the complete year
or the old LTA will be applicable till the month when the LTA was increased & new LTA for the remaining months.
Mohommad
LTA is to be used once a year, not more than once in a year , So it does not depend when its increased , however its fixed at 50k per year . Is it differnet for you ?
Manish
Hi Manish,
At the start of the year my LTA component was X, now i had a salary revision & the LTA component has increased to x+y. The compensation team says the old LTA will be calculated for the last 4 months & the new LTA amount will be applicable for the remaining 8 months.
As per my understanding the complete new LTA should be given to me. Please clarify.
Mohommad
As far as I know you will CLAIM your LTA one in a year , thats all , so what is the funda of calculating it for different months , are you sure its LTA , its applicable for 1 trip in a year .
Manish
Hi Mohammad… If U had already opted LTA in Ur choice pay then U may request Ur Acc deptt to change the pre salary increment amount to post increment… In my case I had not exercised LTA but after getting my salary revised in Sept’10, I requested my Acc deptt to include it in my Choice Pay and they agreed. So I can now claim LTA as per my revised basic salary!! 1 more thing, my LTA claim request was rejected in Nov’10 coz Acc deptt says the Service Tax has to be included in the bills. Can any1 plz confirm on this development as many colleagues claims got accepted previously.
Saurav
I suggest you take views from forum members in this ; http://www.jagoinvestor.com/forum/
My company doesn’t provides LTA claim facility..? How can I then claim it…?
See this article http://www.jagoinvestor.com/2011/01/income-tax-saving-tips-video.html
We get LTA after competition of 1 year in the company .If I leave company in 1.8 year after claiming 1 LTA for last year.can I get payment in final settlement for LTA on pro rata basis.if we don’t get this payment which is part of our ctc there is no point to avail LTA option in our salary for sake of 10 or 20% tax benefit. Please explain.
Venkat
Yes ,, you will get your LTA money on prorata basis once you leave the company without availing the LTA money
Manish
Hi Manish,
I have some doubt.I am living in Bangalore and my parents live in Ranchi and we plan for a trip to Jammu.So we met in delhi.Can I get tax benefits for ticket from Bangalore to delhi and Dhanbad to Delhi.
Sorry it’s Ranch to Delhi not Dhanbad to Delhi
Saket
Tax benefit for travel is not there in income tax, only you can take LTA benefit with your family ,but that has to be only from place A to B and back to B to A
Manish
Hi,
I was trying to claim LTA in my company but they say i have to show 3 days of earned leaves.But as it was an urgent trip and not planned i applied for Leave without pay since i used all me earned leaves earlier.
Is is a mandatory policy to show 3 earned leaves.
Rahul
LTA can be claimed only if you are on PAID LEAVE . Its mandatory , so you cant claim it , dont worry .. better not claim it this year .. you will still have 2 chances in 2012 and 2013
Manish
As explained above by you that Block years for LTA is calander year.
Can I claim two journey in one finance year but different calander year?
Rajeev
Yes .. you can claim it twice , but those shouldl be two different financial years
Manish
Dear Mansih,
But my case is different calender year and one finance year.
I claimed in April 2011 and now i want to claim again in Feb 2012.
Regards
Rajeev
I dont think that would be possible
Manish
I am waiting for reply! on my comment “Rajeev January 16, 2012 at 12:33 pm”
Hi All,
I have 1 confusion, as to whwther the link between my travels have to be correct for submitting LTA claims? Say I travelled from A to B to C to D to E and back to A via F route & do not have a proof (either ticket or private taxi hire bills) for 1 of the links (say C to D), then will it be a problem/illegal on my part?
Heres the detail.
Recently, I travelled from Banka to Patna (via Train), Patna to Ahmedabad (via flight), Ahmedabad to Jamnagar (via train), Jamnagar to Vadodara (via my car), Vadodara to Gulbarga & back to Vadodara (via private-bus service of tour operator), Vadodara to Jamnagar (via my car), Jamnagar to Ahmedabad (via train), Ahmedabad to Delhi (via flight), Delhi to Patna (via train) & Patna to Banka (via train).
Now I am about to claim LTA for the above travels, I dont have any ticket/bill for the leg of journey from Jamnagar to Vadodara & Vadodara to Jamnagar which I did with my car. So while producing tickets, this link will not show-up. Is this ok/legal?
going for Himachal tour on a rental car for 7 days with family. can i claim 45000 as taxi bill for LTA. Travel from Delhi to chandiarh by Train and then from chandigarh to Himachal by Taxi. Taxi Bill will be approx 45000
No , taxi bill can not be used like that
sir, main retired up gvt. employee hu. medical reimburshment ek financial year me kitni baar liya ja sakta hai aur kitne amount ki limit tak, kripya sir detail me bataiyega ?
Vinay
You can take it upto 15,000 , and take many times ,but the total has to be upto 15,000 .. better that you take it only once in a year .. collect all the bills and get reimbursements once