Leave Travel Concession (LTC) rules and applicability, With Automated Master of Form 16 Part B for F.Y.2016-17

Leave Travel Concession (LTC) is nothing but a type of salary component where your employer is providing some yearly benefit to travel with your family. Usually, it is mentioned as a yearly component but will be paid on monthly wise. This facility will be availed to only “Family” members. Family meaning for this purpose includes spouse and children. The point to be noted that if you have more than two children then you can claim for up to only two children, not more than that. It also includes brothers, sisters, and parents who are wholly or mainly dependent upon the employee. Below are the few features which you must understand it.

Download Automated Master of Form 16 Part B for F.Y.2016-17 [ This Excel Based Software can prepare at a time 50 employees Form 16 Part B with all latest amended by the Finance Bill 2016-17]

Taxability-

Suppose Mr.X is entitled to the yearly LTC of Rs.50,000 and he joined the company on 1st June 2012 (Financial Year 2012-13) and he took a journey in the month of December 2012. But according to LTC yearly applicability, this journey will be considered for the year 2012 but not for 2013. Because LTC will be considered on yearly base starting from 1st January of a year to 31st December of a year ending. It is not same like Financial Year (1st April to 31st March). Usually, LTC can be availed twice in a block of four calendar years. The current block of years will be as below.

2002-2005 (From 1st January 2002 to 31st December 2005)

2006-2009 (From 1st January 2006 to 31st December 2009)

2010-2013 (From 1st January 2010 to 31st December 2013)

2014-2017 (From 1st January 2014 to 31st December 2017).

As said above you can claim only twice in a block of 4 years period. If you claimed twice in a block then the remaining concession will be taxable income as per your slab. But if not at all claimed on a block or claimed only once then you can carry forward the remaining facility to immediate next block. In such a case excluding the previous carry forward you are again entitled to travel twice in a block of that presiding year. Suppose Mr.X claimed only once in the block of 2010-13 then he can carry forward the remaining one travel to immediate next block i.e. 2014-017. So in the block of 2014-17, he will be totally entitled to 3 travels.

Conditions to allow LTC–

1) If a journey is performed by Air-Amount of economy class air fare of the national carrier by the shortest route or the amount spent, whichever is less.

This is where PSU’s few employees manipulated. Instead of claiming for the shortest route they claimed as per their wish. Which cost Government exchequer a lot.

2) If a journey is performed by Rail-Amount of air-conditioned first class rail fare by the shortest route or amount spent, whichever is less.

3) If the origin of journey and destination are connected by rail but journey is performed by any other mode of transport-Amount of air-conditioned first class rail fare by the shortest route or amount spent, whichever is less.

4) If origin of journey and destination are not connected by rail-

• Where recognized public transport system exists-First class or deluxe class fare by the shortest route or the amount spent, whichever is less.
• Where no recognized public transport system exists-A amount of air-conditioned first class rail fare by the shortest route or amount spent, whichever is less.

5) The exemption will be based on the actual expenses-Suppose Mr.X is entitled to Rs.50,000 LTC but if he claimed Rs.40,000 as expenses then he will be entitled to Rs.40,000 LTC. Also at the same time if he claimed LTC for Rs.60,000 then he will be entitled only for Rs.50,000.

6) The exemption is available on in respect of fare-It strictly includes only air fare, rail fare or bus fare. It will not include such expenses like boarding or lodging expenses or taxi charges.

7) The fare for more than 2 children-If kids are born before 1st October 1998 then they are all eligible for travel irrespective of the number. But kids who born after 1st October 1998 then only two kids will be allowed to travel. So if Mr.X has 3 kids born before 1st October 1998 and 3 kids after 1st October 1998 then he can claim expenses for all kids born before 1st October 1998 but only for two kids who born after 1st October 1998.

8) If you travel two times in a single year then you can claim both in the same year.

9) You must be on earned/annual leave during the period of travel. So your travel during holidays will not be considered as LTC.

10) If husband and wife both are working and entitled for LTA then both can’t claim for the same travel.

Proof of travel-It is not obligatory part to submit proof !!! Yes, recent judgments on this issue clearly mentioned that it is employer’s wish to ask for proof and verify it. But your employer has right to ask for the proof. Remember when your employer files LTC to income tax department then the assessing officer can ask the proof, not to the employer but to the employee .

Hence it is always advisable to have proper proof before going to submit LTC (whether your employer asking for it or not). Because at the end you are answerable to Income Tax Department but not your employer.