Jagoinvestor

February 20, 2009

Leave Travel Allowances and medial Reimbursements – The tax free allowances

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.

Leave travel allowance

What is LTA ?

As the name suggests, LTA i.e Leave Travel Allowance is an allowance that an employee receives form his employer for his traveling expenses while he/she is on leave. This allowance is given only for the domestic traveling, international traveling is not covered in this allowance.

There are normally two situations when employee gets this allowance :

#1. Employee receives this allowance while traveling alone or with family or dependents from his current employer.

#2. Employee receives this allowance while traveling alone or with family or dependents from his former employer after retirement or termination of job.

It is the benefit given to a salaried employee and you can claim travel expenses from any one journey in a year. Lets see some important features of this allowance:

Features of LTA

  • There is a block of 4 yrs decided by govt ( current block is 2006-2009). In a block you can claim LTA for any two years. For other 2 yrs you cant claim it, so total 50,000 will be taxable in those 2 yrs.
  • 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 utilized, 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.
  • If an employee doesn’t claim once or twice in a block year, he/she can carry forward one claim to the next block year. But the condition is he/she has to claim for that allowance in the first year only of that particular block year.
  • If husband and wife both are receiving LTA then they can claim for the allowance in the same year but for different destinations.

Restrictions on claiming LTA

  • You can claim on only twice in a block year
  • Only actual cost of traveling is covered in this allowance
  • You cannot claim LTA 2 times in a year.
  • If the children are born after 1 October 1998 then you can claim for only 2 children’s traveling expenses. There are no restrictions for the children born before 1 October 1998.

Watch this video of rules and exemptions of LTA:

How much amount can claim under this allowance to get tax benefit?

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 didn’t 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 don’t claim it, you will have to pay tax on this part .

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 : Utilizing 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 …

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228 Comments
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Maulik
Maulik
7 years ago

Hi Manish,
can i submit last financial year’s bills as proof for medical reimbursement, if it has not been submitted in the past and claim has not been made?
If yes, what’s the validity of these bills for tax exemption i.e , 1 year , 2 years?

RR
RR
7 years ago

Hi Manish,

I changed my job in January2016 and was not able to submit my LTA claim to my company for a travel in Dec 2015. They have not included it in my form 16 for 2015-16. Can I still claim this travel as a part of my LTA? If so how do I do it as the Form 16 is already created?

Thanks!

Ramesh
Ramesh
7 years ago

what about this reply(from above)

prabhat
May 6, 2016 at 7:33 pm
Remember; there are no such things ‘ so called final Rules’. Policy may differ from company to company. But remember one thing if any excess amount has been deducted by employer which can be from Salary/medical/Lta etc. you can always claim money back from income tax authority by presenting sufficient bills. (remember you better submit Originals, else god may help you)

Ramesh

Kunal
Kunal
7 years ago

Can a pvt ltd company with an annual turn-over of >6000Cr p.a. compulsorily settle LTA in March every year? Is there no rule that ensures that settlement is only as per the blocks given by the Govt?

jigar
jigar
8 years ago

Hi Manish,

I’m working in MNC and we have 15000 as Medical and 25000 as LTA. It is a part of CTC. If in 2106-2017 calendar year, I don’t claim the LTA and Medical, will I get the full amount in the March month which will be taxable? or this amount can be carried forward to the next year?

If I leave the company before the end of this year, will I get the pro-rated amount for both in Full and Final settle ment?

Thanks in advance

prabhat
prabhat
Reply to  jigar
8 years ago

No!
first thing that you need to remember is; LTA/Medical are part of your CTC and you can claim it once a year any time as per your convince. the only thing that matters is Should you want it taxable or non; hence you need to show bill for both if you dont want govt to tax your money.
so forget worries and leave your company happily.. 🙂

sandeep
sandeep
8 years ago

Is medical reimursment deponds on basic salary. for eg,if in a month i have worked for 25 days then my baisc salary will be deducted.is my medical reimbursment will be deducted in same proportion ? please reply

Inder
Inder
8 years ago

Hi Manish,

My current employer does not have the component of ‘Medical reimbursement’ in the salary structure.Can I still get tax benefit on bills upto 15000 INR. Plz respond on priority.

Thanks

Ankush
Ankush
8 years ago

I travelled in last June 2015 but in Nov 2015 changed my job, Can I submit and claim the LTA from my current employer (I had not claimed from my former employer)? Would it be pro rated or whole amount as mentioned in my offer letter would be eligible for LTA on annual basis ?

tanya
tanya
8 years ago

Hi Manish,

I have joined a new organization, they have given me a variable breakup of 54000 annually, out of which INR 15000 is from Medical reimbursements and INR 15000 is for LTA, also INR 24000 for Food coupons. Please suggest if this money (1250(MR)+1250(LTA)) will be credited to my account if I show them the bills on a monthly basis and if I fail to show these bills, what will happen to the sum ?

Pinky
Pinky
8 years ago

Hi,

I needed to submit LTA claim for travel period in December 2015. However, my company has already credited LTA amount after tax deduction in my January salary. Am I not eligible for the tax exemption if I submit the bills in February (before end of financial year)?
Please advise.

prabhat
prabhat
Reply to  Pinky
8 years ago

just file your tax return and claim your money back. Simple

kp
kp
8 years ago

Hi
I purchased the whole tickets through miles/points accumulated in my credit card, . other option from credit card was to encash the whole amount. can I claim lta for these tickets?

prabhat
prabhat
Reply to  kp
8 years ago

Technically you can not; as to claim the amount you need to show money transaction; however you can edit your invoice copy and put transaction amount instead of claimed miles.

Rishav
Rishav
8 years ago

For Medical reimbursement do we need to submit original bills to the employer? Or just photocopy will do?

Avinash
Avinash
8 years ago

Hi Manish
I have joined new Org in September 2015 & have not declared the Flexi declaration for medical reimbursement (15000) in the company portal. I submitted all the medical bills but HR rejected the claim as I have not declared in the portal.

Can they do that by rules? what can be done?

Prabhakar
Prabhakar
8 years ago

Hi Manish,

In my salary breakup, the component is mentioned as ‘medical reimbursement’ (not allowance). I have not submitted the medical bills so far, in any of the months, and my company is not paying me that component (Rs. 1250.00/month). I understand that they should still pay me that component, and if I don’t submit the bills, it will be taxable (30% of Rs. 15000.00). Please correct if I am wrong. If the employee does not submit the bills, is it OK for the company not pay the ‘medical reimbursement’ component to the employee?

Prabhakar
Prabhakar
Reply to  Jagoinvestor
8 years ago

Manish,

Thanks for reply. Do you mean the emplyoyer should pay me? If yes, in reply to Rahul’s question below you said that emplyoyer’s rules are final as far as medical reimbursement and LTA are concerned, both answers are conflicting. If employer’s rules are final, they are right in their authority of not paying me the medical reimbursement. I’m confused, please explain.

Sachin
Sachin
Reply to  Prabhakar
8 years ago

They will not give you monthly, In March ur employer will return it for the amount u r not claimed and it is taxable.
And if u submit, you get that amount in that month only.

Rahul
Rahul
8 years ago

I have a particular query related to LTA.
I traveled this year with my spouse and incurred flight expenses amounting to 51000. The journey date was from 20th June to 1st July 2015.

My employer has a policy wherein all claims (LTA, medical, other reimbursements) are entertained on a quarterly basis. For e.g., anything incurred in 1st quarter (Apr-June) has to be submitted for approval by 1st half of July, otherwise it will not be entertained.

I submitted this claim in Aug, as I was caught up in some urgent work in July. My employer has rejected this claim, on the grounds that these bills are pertaining to 1Q. Since my travel extended to 1st July (which is 2nd quarter), is it right on their part to reject the claim ? What recourse do I have ? Kindly help as this is a huge amount for me.

-Rahul

prabhat
prabhat
Reply to  Rahul
8 years ago

Remember; there are no such things ‘ so called final Rules’. Policy may differ from company to company. But remember one thing if any excess amount has been deducted by employer which can be from Salary/medical/Lta etc. you can always claim money back from income tax authority by presenting sufficient bills. (remember you better submit Originals, else god may help you)

nancy
nancy
8 years ago

I am an IBM employee and my parent is a Govt. servant. Is he become my dependant parent for LTA claim ?

prince
prince
8 years ago

Is it compulsory to take LTA i.e i dont want LTA amount to get deducted from my monthly salary ?
and is their any compulsory amount which i need to put in LTA

Dipen
Dipen
8 years ago

Hi,

If i don’t submit medical and LTA claim bills to employer, then can i take the benefit in the income tax return or tax benefit is available only if it is submitted to employer?

Anil
Anil
9 years ago

Hi,

I travelled from Bangalore to Jammu via Delhi by air with my family. From Jammu we travelled to Srinagar by road for sightseeing. Our return journey to Bangalore was from Srinagar via Mumbai by air. Can I claim LTA for the trip, since my destination was Jammu while going to J&K, but I travelled back from Srinagar on return journey? Please advise if I can claim LTA exemption for the airfare.

Thanks.

Chetan
Chetan
9 years ago

I am a self employed professional. So can I claim Medical Reimbursement which is available upto 15000/-.