Leave Travel Concession is as per section 10(5) read with Rule
2B of the Income Tax Act and Rules.
Who are covered: The employee or former employee and his family. Family here
includes the spouse and children of the individual.
Exemption is not available for more than two children born after
1.10.1998. But multiple births (twins, triplets etc) after one child are not counted to deny exemption. For
children born before 1.10.1998, exemption is available without any limit.
In case of the parents, brothers and sisters of the individual
or any of them, if they are wholly or mainly dependent on the individual.
Exempt Travel: In connection with his proceeding:
Ø On leave to any place in India, or
Ø On retirement from service, or after termination of
service to any place in India
What is exempt: The value of any travel concession or assistance received by or
due to an employee or former employee from his employer or former employer.
Note: This exemption can be claimed in respect of two journeys
performed in a block of four calendar years commencing from the calendar year 1986. But if the leave travel
concession is not availed in any block of four calendar years, the exemption is given to the leave travel
concession availed in the first calendar year of the immediately succeeding block of four calendar
Hence, there is a provision to carry forward if no concession is
availed during a block of four calendar years. But instead of two exemptions, only one exemption can be carried
forward and that too, to be utilised in the first calendar year of the next block. This carry forward is not to be
counted in calculating two exemptions in the succeeding calendar year.
In respect of two journeys performed out of the block of four
calendar years, the first journey is exempt in full as per the prevalent conditions for exemption. The exemption
for the second journey is limited to the amount of fare by the shortest route to the home town of the employee. The
excess of the leave travel concession actually received over the fare to the home town is to be treated as
Amount of Exemption:
Mode of Journey
Actual expenditure incurred subject to maximum of economy fare of
the national air carrier by the shortest route.
Source and destination connected by rail but journey not
performed by air (performed by rail, road etc)
Actual expenditure incurred subject to maximum of air-conditioned
first-class rail fare by the shortest route.
Source and destination not connected by rail
1. Where recognised public transport system exists: actual
expenditure incurred subject to maximum of first class or deluxe class fare on such transport by
the shortest route.
2. Where no recognised public transport system exists: Actual
expenditure incurred subject to maximum of the amount equivalent to the air-conditioned first-class
rail fare for the distance of the journey by the shortest route as if the journey had been
performed by rail.
Ø Available on the expenditure actually incurred. Hence, the
proofs regarding the expenditure incurred like tickets etc. have to be submitted to the person responsible
for deducting tax on salary income.
Ø Any amount paid to employees by way of fixed leave travel
allowance is not eligible for exemption.