How LTA exemption works
Section 10(5) of the Income-tax Act exempts the value of any travel concession or assistance received from the employer for travelling on leave to any place in India, subject to limits. The exempt amount is the least of:
- The LTA component your employer pays you (the salary line).
- The actual travel cost you incurred (tickets only).
- The mode-of-transport cap (economy air fare / AC1 rail fare / first-class bus fare for the shortest direct route).
Whichever of the three is smallest is what you can claim tax-free. The rest goes back into your salary as taxable income.
The block-of-4-years rule
LTA exemption is allowed for at most two journeys in a block of four calendar years. The block is fixed by the Income-tax department (not the financial year):
- 2018–2021
- 2022–2025
- 2026–2029 (current block)
If you don’t use both trips in a block, one can be carried forward to the first calendar year of the next block. So if you only used 1 trip in the 2022-25 block, you can claim it in calendar year 2026 in addition to the 2 normal trips of the 2026-29 block.
What counts as “family” for LTA
Under Section 10(5), “family” means:
- Spouse and children of the employee (including step children, adopted children).
- Parents, brothers and sisters of the employee, who are wholly or mainly dependent on the employee.
- Maximum two children are covered if born after 1 October 1998. Children born before that date are all covered. Multiple birth (twins / triplets) after the first child counts as one event.
Documents to keep
- Original tickets / e-ticket print-outs with PNR.
- Boarding passes (for air travel).
- Fare receipts / invoices showing date and class of travel.
- Approved leave application for the period of travel.
- Proof of family-member relationship if claiming for relatives (PAN, Aadhaar, school ID etc.).
Submit to your employer’s payroll / LTA portal within the cut-off (usually 31 January or with the year-end salary tax declaration). Keep originals for at least 6 years — assessing officer can ask during scrutiny.
FAQ
What is Leave Travel Allowance / LTA?
LTA (also called LTC for Central Govt) is an allowance an employer pays so the employee can travel within India during leave. Under Section 10(5) of the Income-tax Act, the actual travel cost is tax-exempt up to the LTA component in salary, subject to mode-of-transport caps and a per-block ceiling.
What is the current LTA block?
LTA exemption operates on blocks of four calendar years. The current block is 1 January 2026 to 31 December 2029. The previous block was 2022-2025. You can claim LTA exemption on at most two journeys during a block.
What expenses are exempt under LTA?
Only the travel cost (rail, air or road) for going and returning. Hotel, meals, sightseeing, taxis at destination — all not exempt. The exempt amount is the lower of (i) actual travel cost incurred and (ii) LTA component in your salary.
What mode-of-transport caps apply?
Air: economy-class fare for the shortest direct route. Rail: AC First Class fare for the shortest direct route. If origin and destination are connected by rail but you fly, the cap is AC First Class rail fare. If neither is connected by rail, the cap is the deluxe / first-class bus fare.
Who can be covered?
You + your family: spouse, up to 2 children (born after 1 Oct 1998 — earlier children all covered), and dependent parents / siblings. The 2-children cap doesn’t apply if the second pregnancy was a multiple birth.
Can I carry forward an unclaimed trip?
Yes — if you don’t claim both trips in a block, one trip can be carried forward to the first calendar year of the next block. So in 2026 you can claim a 2022-25 carry-forward trip plus two new 2026-29 trips.
Is LTA available in the new tax regime?
No — Section 10(5) exemption is not available in the new regime (Section 115BAC). Employees on new regime get the full LTA component as taxable salary.
Is foreign travel covered?
No. Section 10(5) covers only travel within India. Foreign travel cost gets no exemption even if your employer pays for it.