Understanding LTA Exemption Rules and Tax Implications for Employees

Query

If a person has an annual eligibility of LTA as 20,000. He carries forward his first year's 20,000 to the next year and then claims this 40,000 LTA. Will this 40,000 entirely be non-taxable? Suppose he holds it for 4 years then claims it once, which is equal to 80,000. Then, whether this 80,000 is exempted, or only 20,000 + 20,000 = 40,000 is exempted.

Hi Deepak,

An employee can claim LTA exemption two times in a block year (the current block year is 2010-2013). The exemption cannot exceed the amount paid as LTA in the current year.

In your case, if the employee claims Rs. 80,000 in the current FY 10-11, then the entire amount will be exempted. This is the case regardless of whether LTA was paid for the last four years or two years.

For further clarification, please contact me at taksh.taksh@gmail.com.

Hi,

In the FY 10-11, an employee will not have eligibility for Rs. 80,000. However, if they carry forward 3 years of LTA and claim the same in the fourth year, they can get an exemption of Rs. 80,000 provided they have submitted proper proofs of traveling.

Please read the link for more details on LTA: https://www.citehr.com/281314-doubts-regarding-lta.html.

Regards,
R. Ponraj