Dear All,
I am handling Comp. & Ben for my organization. I want to seek advice from you all regarding the LTA limit. What I know is the general trend is to give One Month's Basic as LTA. However, my concern is for Top Management, if they are entitled to one month's basic, how realistic is it for them to claim it as per IT rule? They will claim it once in 2 years. For example, if they are entitled to 1 lakh per annum, is it realistic for them to claim 2 lakhs as LTA? Should we stick with one month's Basic or lower the amount? What is considered good practice? I am looking forward to hearing your views and learning about what practices are being followed in your organization.
From India, New Delhi
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5I am handling Comp. & Ben for my organization. I want to seek advice from you all regarding the LTA limit. What I know is the general trend is to give One Month's Basic as LTA. However, my concern is for Top Management, if they are entitled to one month's basic, how realistic is it for them to claim it as per IT rule? They will claim it once in 2 years. For example, if they are entitled to 1 lakh per annum, is it realistic for them to claim 2 lakhs as LTA? Should we stick with one month's Basic or lower the amount? What is considered good practice? I am looking forward to hearing your views and learning about what practices are being followed in your organization.
From India, New Delhi
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Hi,
To the best of my knowledge, there is no upper limit on LTA that a company can designate or disburse. However, as per the IT rules:
1) An employee can claim LTA for self and dependent family members once in two years with the necessary supporting documents, and the same will be non-taxable.
2) An employee and their family will have to travel within the country only.
3) The employee and their dependent family members can choose to travel by economy class.
Anything over and above the supported amount would be considered as taxable income.
Regards,
HRP
From India, Mumbai
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To the best of my knowledge, there is no upper limit on LTA that a company can designate or disburse. However, as per the IT rules:
1) An employee can claim LTA for self and dependent family members once in two years with the necessary supporting documents, and the same will be non-taxable.
2) An employee and their family will have to travel within the country only.
3) The employee and their dependent family members can choose to travel by economy class.
Anything over and above the supported amount would be considered as taxable income.
Regards,
HRP
From India, Mumbai
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Hi,
As per my knowledge, there is no limit for LTA. According to the IT Rules, an employee can avail of the LTA benefit for self and dependents of his family members on two journeys in four financial years, subject to actual expenses on economy class against subsequent supporting documents.
Thanks & Regards,
Harish Kumar K. S.
Mob: 9986839169
From India, Bangalore
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As per my knowledge, there is no limit for LTA. According to the IT Rules, an employee can avail of the LTA benefit for self and dependents of his family members on two journeys in four financial years, subject to actual expenses on economy class against subsequent supporting documents.
Thanks & Regards,
Harish Kumar K. S.
Mob: 9986839169
From India, Bangalore
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Minimum limit for LTA is 8.33% of Basic Salary of an employee per month and the same will be calculated for the entire period. There is no maximum limit defined regarding this. There is a block period of 4 years, and any employee can claim LTA a maximum of two times in the block period of 4 years. If an employee claims more than two times, it will be taxable; provided that the employee comes under the tax limit. To claim the LTA, the employee needs to produce journey proof as per travel. An employee can claim LTA without any supporting documents, but it will be taxable. For more information, please feel free to contact me.
Rakesh Kashyap
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Rakesh Kashyap
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Dear Shilpi,
There is no upper limit for giving the perquisites like LTA to an employee. You can even provide Rs 5.0 lakhs as LTA. However, as per IT rules, only Rs 15,000/- is allowed for exemption under the IT Act. Anything above this amount will be taxable. There is a block period of 4 years, and an employee can claim LTA a maximum of two times within this period. I recommend checking with your taxation department, which your organization might have already opted for, regarding the block year.
Thank you.
From India, Pune
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There is no upper limit for giving the perquisites like LTA to an employee. You can even provide Rs 5.0 lakhs as LTA. However, as per IT rules, only Rs 15,000/- is allowed for exemption under the IT Act. Anything above this amount will be taxable. There is a block period of 4 years, and an employee can claim LTA a maximum of two times within this period. I recommend checking with your taxation department, which your organization might have already opted for, regarding the block year.
Thank you.
From India, Pune
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Hi Shilpi,
As per my understanding, some companies give 1 month's basic salary under LTA, some use 1-10% of CTC, and some companies provide a cap of 75000/- or 100000 (depending on the CTC of an employee).
In your case, you have carried forward the previous year's LTA to the current year and are providing the benefit. There is no rule for a maximum limit. If an employee provides the bill with valid supporting and rule, then he is eligible to avail the benefit.
Regards,
Siji
From India, Mumbai
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As per my understanding, some companies give 1 month's basic salary under LTA, some use 1-10% of CTC, and some companies provide a cap of 75000/- or 100000 (depending on the CTC of an employee).
In your case, you have carried forward the previous year's LTA to the current year and are providing the benefit. There is no rule for a maximum limit. If an employee provides the bill with valid supporting and rule, then he is eligible to avail the benefit.
Regards,
Siji
From India, Mumbai
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Dear All,
Thank you for your responses. My concern is that if I provide a 1-month Leave Travel Allowance (LTA) to a senior management employee, which amounts to approximately 1 Lakh, what is the benefit, as they won't be able to claim 2 Lakhs for any journey in India, even if they fly from Jammu & Kashmir to Kanyakumari? Moreover, if the remaining amount will be taxable, then why not include it in any other component instead of LTA?
Do you think I should offer an LTA amount that is more realistic and easier to claim?
Regards,
Shilpi
From India, New Delhi
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Thank you for your responses. My concern is that if I provide a 1-month Leave Travel Allowance (LTA) to a senior management employee, which amounts to approximately 1 Lakh, what is the benefit, as they won't be able to claim 2 Lakhs for any journey in India, even if they fly from Jammu & Kashmir to Kanyakumari? Moreover, if the remaining amount will be taxable, then why not include it in any other component instead of LTA?
Do you think I should offer an LTA amount that is more realistic and easier to claim?
Regards,
Shilpi
From India, New Delhi
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Hi Shilpi,
In this case, you have the following payment options:
1. No carried forward LTA for the succeeding year. Whatever the accrual amount, pay it in the same year itself. It will definitely be taxable.
2. Keep a cap, say 50000/- or 75000/-, to avoid huge tax deductions.
You can provide options to the employees, i.e., if they wish to select LTA or not. If yes, you can offer options like 1% - 10% of CTC (if your company policy allows this). If no, then provide under other reimbursement heads.
Regards,
Siji
From India, Mumbai
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In this case, you have the following payment options:
1. No carried forward LTA for the succeeding year. Whatever the accrual amount, pay it in the same year itself. It will definitely be taxable.
2. Keep a cap, say 50000/- or 75000/-, to avoid huge tax deductions.
You can provide options to the employees, i.e., if they wish to select LTA or not. If yes, you can offer options like 1% - 10% of CTC (if your company policy allows this). If no, then provide under other reimbursement heads.
Regards,
Siji
From India, Mumbai
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Dear Mr. Harish,
I am sorry to correct you. It is not Financial Year, it is Calendar Year. It is not 4 financial years, but a block of 4 years as declared by the Central Govt./I.T. Department. Only travel bills can be accepted, and lodging/boarding bills.
Sathish
From India, Jaipur
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I am sorry to correct you. It is not Financial Year, it is Calendar Year. It is not 4 financial years, but a block of 4 years as declared by the Central Govt./I.T. Department. Only travel bills can be accepted, and lodging/boarding bills.
Sathish
From India, Jaipur
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Dear Shilpi,
Which component about you talking all components are taxable except conveyance and Medical reimbursement and that also have Limit. For higher salary employees you suppose to give them LTA as one month basic. There is no tax limit for the LTA only need to provide the declaration even not details of bills as per IT act. IT also not saying to collect agreement to claim HRA only declaration required that you are paying some amount as rent. Kindly go through with TAXMAN book to get all knowledge for all taxable information related to salary.
Regards, AKD
From India, Kandamangalam
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Which component about you talking all components are taxable except conveyance and Medical reimbursement and that also have Limit. For higher salary employees you suppose to give them LTA as one month basic. There is no tax limit for the LTA only need to provide the declaration even not details of bills as per IT act. IT also not saying to collect agreement to claim HRA only declaration required that you are paying some amount as rent. Kindly go through with TAXMAN book to get all knowledge for all taxable information related to salary.
Regards, AKD
From India, Kandamangalam
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Dear Sathish, Only one correction in your statement. LTA can be claimed only for travel and not for boarding and lodging. M.V.KANNAN
From India, Madras
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From India, Madras
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