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How much LTA is tax deductible?

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Leave Travel Allowance Deduction/LTA.

In the case of an individual, the value of any travel concession or assistance received by, or due to, him,—

(a) from his employer for himself and his family, in connection with his proceeding on leave to any place in India;

(b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

subject to such conditions as may be prescribed46 (including conditions as to a number of journeys and the amount which shall be the exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :

Provided that the amount exempt under this clause shall in no case exceed the number of expenses incurred for such travel:

Eligible LTA Exemption:

The exemption is available only on the actual travel costs, i.e., the employee's air, rail, or bus fare. No expenses such as local conveyance, sightseeing, hotel accommodation, food, etc., are eligible for this exemption. The exemption is also limited to LTA provided by the employer.

For example, Suppose LTA granted by the employer is Rs 90,000 and the actual eligible travel cost incurred by an employee is Rs 110,000. In that case, the exemption is available only to the extent of Rs 90,000, and the balance Rs 20,000 would be excluded in taxable salary income.

What is LTC Cash Voucher Scheme?

The LTC Cash Voucher Scheme was first announced in Oct 2020, by Finance Minister N.Sitharaman in a bid to stimulate demand in a faltering Indian economy. It was officially ratified during the Union Budget 2021.The scheme allows you to claim LTC tax exemption without travelling provided you:

  • Buy goods and services worth 3 times the deemed LTC fare and a minimum of 12% GST.
  • The purchases should be made between 12th October,2020 and 31st May,2021 (deadline extended by two months from 31st March,2021)
  • The payments should be made only via digital mode with the GST number and amount paid mentioned clearly on the invoice.
  • The maximum amount of exemption that can be claimed per person is Rs.36,000.

Uttam Bisht

Mr. Uttam Bisht is a partner with the Delhi Branch of the firm. He has more than 8 years of experience and specializes in Statutory Audit. Expertise in Tax audit of various enterprises. Extpertise internal audit of Private enterprises. Audit planning through business understanding, preliminary analytical procedures, determining materiality levels, and preparation of audit program and pre-audit checklist . He is well conversant with the auditing standards issued by ICAI. .

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