What is a leave travel concession?
Leave travel concession, or LTC is a benefit offered to salaried employees. In a block of 4 years, employees can claim LTC twice. The current block is 2022-20252. Under the Income Tax Act of 1961, individuals can get tax exemption on the actual travel fare subject to the maximum LTA limit set by their employer. If an employee is entitled to ₹40,000 LTA and they spent ₹25,000 on travel fare, only this amount can be claimed under LTC and not ₹40,000.
Some common FAQs on LTC
Now that you know ‘what is leave travel concession’ is, let's dig deeper to learn more about it. Here, we have listed some of the most frequently asked questions regarding LTC. Read on to get answers to your query:
Who is eligible for Leave Travel Concession? 1
Leave travel concession is a benefit available for both state and central government employees with a minimum of 1-year service. The benefit of LTC can be shared with the employee's family. The family includes the spouse, parents, wholly or mainly dependent children, and siblings of the employee.
You must note that the employees whose spouses are working with the Indian Railways or National Airlines are ineligible for LTC benefits.
How much LTC amount can I claim?
The LTC amount may vary for different employees. It depends on the rank and salary of the employee. The amount also depends on the mode of transportation selected by the employee, such as bus, train, or flight. One must choose the shortest travel distance. You must note that LTC does not cover the cost of accommodation, food, sightseeing, local tour costs, etc., only the travel fare.
Can I claim LTC every year?
Leave travel concession can be claimed twice2 in a block of four years. In one year, multiple claims cannot be raised. That means you can only raise 1 claim in a year and a maximum of 2 claims in the 4 year block.
Does LTC cover my family? 1
Yes, LTC also covers the employees' families. The term family covers the employee's spouse, wholly or mainly dependent children, siblings, and parents.
In order to raise an LTC claim for your family, the employee must travel, too.
What is meant by the LTC block year?
Leave travel concession blocks are different from calendar years or financial years. They are blocks of four consecutive financial years. The government announces the LTC block. A four-year block was announced for the first time in 19891. The current block year is 2022-20252, and the previous block is 2018-202121.
What are the tax benefits under LTC?
The tax exemption is based on the actual travel expense. Under Section 10(5) of the Income Tax Act of 1961, taxpayers can claim tax exemption on the actual travel fare.3 The exemption is limited to the maximum LTC provided by the employer. 3
Does the new tax regime provide LTC tax exemption?
No. Taxpayers who opt for the new tax regime cannot claim LTC tax exemption. It remains taxable under the new tax regime. You can claim it under the old tax regime when you file your returns.1
Is LTC applicable for those under a new income tax regime?
No. Individuals who fall under the new income tax regime cannot claim LTC benefits.
Can I avail the LTC of the previous year in the existing block?
Yes. This is known as the carryover LTC. If you do not raise any LTC claims in the first year same can be claimed in the second year but it should be in existing block only then you are eligible for carry-over concession.
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