LTA Leave Travel Allowance Rules 2025 — Tax Exemption & Claim Process

LTA (Leave Travel Allowance) or LTC (Leave Travel Concession) is an employer-provided allowance for employees to travel within India. A key benefit: the travel cost is tax-exempt under Section 10(5) of the Income Tax Act. Here's how it works.

What is the LTA 4-Year Block?

LTA exemption works in 4-year blocks set by the government (not your joining year). The current block is 2022–2025. Within each block, you can claim exemption for 2 journeys.

If you couldn't use one journey in a block, it can be carried forward to the first year of the next block — so you can claim 3 times in the first year of next block.

What Expenses are Covered?

LTA exemption applies to actual travel fare only:

• Air travel: Economy class airfare
• Rail travel: AC First Class (AC1) fare
• Road travel (no rail/air connection): Government transport fare; or AC 1st class rail fare if no public transport

The following are NOT covered — hotel bookings, food, local travel at destination, sightseeing, visa charges.

Example: You flew from Mumbai to Goa and back. Round-trip economy fare = ₹8,000. Your employer pays you LTA of ₹12,000. Exempt = ₹8,000 (actual fare). ₹4,000 is taxable.

Who Can Travel Under LTA?

The "family" eligible for LTA includes:

• Spouse
• Children (up to 2 for those born after October 1, 1998)
• Dependent parents
• Dependent siblings

Note: If you have twins born after Oct 1998, they count as one (the second birth). Children from before Oct 1998 have no limit.

How to Claim LTA from Employer

1. Take actual leave and travel
2. Submit travel bills/tickets to employer's HR/accounts department
3. Employer verifies and approves exempt amount
4. Exempt LTA shown in Form 16; taxable portion added to salary

LTA in New Tax Regime

LTA exemption under Section 10(5) is not available under the New Tax Regime. If you've opted for the new regime, the entire LTA amount received is taxable as salary.

LTC Cash Voucher Scheme (Government Employees)

Central government employees have an option under the LTC Cash Voucher Scheme — instead of actually travelling, they can spend 3x the LTA value on specified goods/services (purchased digitally with GST receipt). This was introduced during COVID years and may be extended periodically — check the latest DoPT circulars for current status.

What if LTA is Unclaimed?

If you don't claim LTA in a year, the balance typically accumulates (employer policy varies). At the end of the block, unclaimed LTA may be paid out as taxable income. The tax exemption only applies when actual travel is undertaken and claimed within the 4-year block.