Example of Leave Travel Allowance (LTA) Exemption Calculation
Example of Leave Travel Allowance (LTA) Exemption Calculation
Example: Details of Mr. X for the
Financial Year 2012-13
Annual
Salary Rs.
6,00,000
Annual
LTA Rs. 10,000
The assessee
travelled from Ahmedabad to Jaipur via Mumbai along with his wife, Father
(Wholly Dependent) and the step child born on 30.09.1998 and twins born on
15.07.2001 and a child born on 31.10.2003. At the same time the Rail and Public
Transport was not available from Ahmedabad to Abu due to heavy rain. The
expenses incurred on such travel are as follows:
Rail fare
per person from Ahmedabad to Mumbai (AC First Class) Rs. 1000
Rail fare
per person from Mumbai to Jaipur (AC First Class) Rs. 900
Stay Exp
per person Rs.
600
Other
Expenses including Food, entertainment etc. Rs.
1500
Other
important information:
AC First
Class Rail Fare from Ahmedabad to Abu per person Rs. 760
AC First
Class Rail Fare from Abu to Jaipur per person Rs.
400
In
addition to the above information it is also stated that Mr. X took only one
journey during the last block of Four years and did not take any exemption and
also it is the first journey of Mr. X during the current block of 2010-13.
Calculate
amount available for exemption U/s 10(5) and also the amount that can be
brought forward and carried forward.
Solution:
Particulars Amt.
Rail Fair from Ahmedabad to Abu (Note 1) (Rs.760*6) Rs.
4560
Rail Fair from Abu to Jaipur (Note 1) (Rs.400*6) Rs.
2400
Total Exemption available U/s 10(5) Rs. 6960
The
Balance Amount Rs.3040 (Rs.10,000-Rs.6,960) is Taxable along with salary.
The
assessee can carry forward the exemption of Rs. 10,000 to the First Calendar
year of the next block as he has travelled only once in the current block.
In the
case where he took the only single journey in the previous block he cannot Brought
Forward any exemption as the First Calendar Year of the current year
has lapsed.
Notes:
1)
Even when Mr. X has travelled to Jaipur
Via Mumbai the fare of the same will not be allowed as an exemption. The
exemption is available only on the fare by shortest distance as per the act and
in case where there is an absence of the recognized public transport system, AC
First Class Rail Fare for the distance of the journey by the shortest route, as
if the journey has been performed by rail. The second thing is fare of only 6 people
are only considered as only children born after 01.10.1998 are considered including Step Child and Adopted Child as children born out of multiple births (i.e. twins,
triplets, quadruplets, etc.) after the first child will be treated as single
child but the same would not be in the case when there are already
multiple children at first, so exemption could not be availed on last child
born on 31.10.2003.
Certain Points regarding Expert Knowledge:
-
It was heard in the case of PSU Bank Employee v/s Chandigarh bench of
the Income Tax Appellate Tribunal (ITAT) that, if the employee is
travelling by air across India, the air ticket should only comprise of air fare
paid for travelling in India and must not include any fare for travelling
overseas to avail exemption on Leave Travel Allowance received from Employer
and also added that exemption will not be provided even if the Air fare for
reaching at Indian desination is disclosed separately in the Air Ticket i.e.
exemption is not available on the entire cost including foreign travel as well
as on amount paid for partial Indian Travel.
- In case of restriction of travelling with the
number of children born after 1.10.1998, children born out of multiple births
(i.e. twins, triplets, quadruplets, etc.) after the first child will be treated
as a single child.
- In case an assessee and his/her spouse
both receive LTA they can adjust their Travel allowance and can travel every
year as they can avail total 4 exemptions twice for both in a block of four
years. But they both cannot take an exemption for a single journey
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