What Is LTA (Leave Travel Allowance)?
LTA (also called Leave Travel Concession) is an allowance your employer pays for travel when you go on leave. Under Section 10(5) read with Rule 2B, the fare portion of that travel is exempt from tax, within limits, under the old tax regime.
Key characteristics:
- Exempt only for travel within India
- Exempt for two journeys in a block of four calendar years
- Covers only the fare for you and eligible family members, by the shortest route
- Hotels, food, local transport and sightseeing are not covered
- Not available under the new tax regime (Section 115BAC)
LTA Block Years: 2022-2025 and 2026-2029
Blocks run on calendar years, not financial years. You can claim the exemption for two journeys in each block, in any years of the block.
Current blocks:
- Block 2022-2025: January 1, 2022 to December 31, 2025 (ended)
- Block 2026-2029: January 1, 2026 to December 31, 2029 (current)
Carry-over rule: If you did not use one or both journeys in a block, one unused journey can be carried into the first calendar year of the next block. For the 2022-2025 block, that journey must be performed in calendar year 2026, and it does not count against the two journeys of the 2026-2029 block.
LTA Exemption: Amount Limits
The exemption is limited to the actual fare spent, and to these ceilings (Rule 2B):
| Mode of travel | Maximum exempt amount |
|---|---|
| By air | Economy class air fare of the national carrier by the shortest route |
| Place connected by rail, travelled by any other mode | Air-conditioned first class rail fare by the shortest route |
| Place not connected by rail, recognised public transport exists | First class or deluxe class fare of that transport by the shortest route |
| Place not connected by rail, no recognised public transport | Air-conditioned first class rail fare for the distance by the shortest route |
Key point: If you travel in a higher class, the extra fare is simply taxable; it is not deductible anywhere else.
Eligible Family Members for LTA
You can claim LTA for travel of:
- Self
- Spouse
- Children, subject to the two-child rule: the exemption is not available for more than two children born after October 1, 1998 (children born before that date, and a multiple birth after the first child, are not restricted)
- Parents, brothers and sisters who are wholly or mainly dependent on you
Eligible Journeys and Routes
Eligible travel:
- Travel while you are on leave
- To any place in India
Not eligible:
- Travel outside India, even if part of the journey is within India
- Official or business travel (reimbursed separately, not LTA)
Route: The exemption is computed on the shortest route to the destination. If you travel a longer route or with stopovers, only the fare for the shortest route to the farthest destination is exempt.
How to Claim LTA: Step-by-Step
Step 1: Take Leave and Travel
- Take leave as per your employer's policy
- Travel within India and keep all tickets and boarding passes
Step 2: Submit Proof to Your Employer
Under Rule 26C, salaried employees furnish evidence of claims to the employer in Form 12BB. For LTA, give the travel details and the tickets (or other proof of travel) within the time your employer sets during the financial year, so that the exempt amount is excluded while computing TDS.
Step 3: Check Form 16
The exempt LTA should appear under "Allowances exempt under Section 10" in Form 16.
Step 4: ITR Filing
- Report the exempt amount under Section 10(5) in Schedule S of your ITR (old regime only)
- Keep the tickets and Form 12BB copy for your records
If your employer did not treat the LTA as exempt, a claim directly in the ITR is risky: LTA is an exemption on an allowance actually paid by the employer, and the department may ask for proof.
Critical Rule: New Tax Regime & LTA
If you opt for the new tax regime, the LTA exemption is not available. Any LTA paid is fully taxable as salary.
Calculation example (salary Rs. 15 lakh, FY 2025-26):
Old Regime with LTA:
- Salary: Rs. 15,00,000
- LTA exemption: Rs. 60,000
- Standard deduction: Rs. 50,000
- Section 80C: Rs. 1,50,000
- Taxable income: Rs. 12,40,000
- Tax incl. 4% cess: Rs. 1,91,880
New Regime (no LTA):
- Salary: Rs. 15,00,000
- Standard deduction: Rs. 75,000
- Taxable income: Rs. 14,25,000
- Tax incl. 4% cess: Rs. 97,500
Difference: the new regime is Rs. 94,380 cheaper here, even after losing LTA
LTA on its own rarely justifies the old regime. It helps only when combined with large HRA, home loan interest and other deductions. Compare both regimes on your actual numbers.
Block Year Strategy
Current situation (2026):
- Block 2022-2025 has ended. If you left a journey unused, you can still use one carried-over journey in calendar year 2026.
- Block 2026-2029 has started, with two fresh journeys.
Action items:
- Check how many journeys you claimed in 2022-2025. If one or both were unused, plan the carried-over journey before December 31, 2026.
- Give proof to your employer on time, within the financial year, so the exemption is reflected in Form 16.
- Track your claims in each block; employers across job changes do not track this for you.
Common Mistakes
Mistake 1: Thinking LTA Covers Hotels and Food
LTA covers ONLY the fare. Hotels, meals, local taxis and sightseeing are not exempt.
Mistake 2: Claiming a Foreign Trip
Travel outside India does not qualify, even for the domestic leg of the journey.
Mistake 3: Claiming More Than Twice Per Block
The limit is two journeys per four-calendar-year block, plus at most one carried-over journey in the first year of the next block.
Mistake 4: Expecting LTA Under the New Regime
The new regime does not allow Section 10(5). Compare regimes before choosing.
Mistake 5: Including Ineligible Family Members
Only spouse, children (two-child rule for those born after October 1, 1998) and dependent parents, brothers and sisters qualify.
Source Attribution
This guide is based on:
- Income Tax Act, 1961, Section 10(5): LTA exemption
- Rule 2B of the Income-tax Rules, 1962: blocks, carry-over, fare limits and the two-child rule
- Rule 26C and Form 12BB: evidence of claims to the employer
- Section 115BAC: LTA exclusion under the new regime
