Leave Travel Allowance (LTA) is one of the most commonly misunderstood salary components — many employees assume any vacation expense qualifies, then are surprised when most of their claim gets disallowed. LTA exemption under Section 10(5) covers only the cost of travel (not hotels, food, or sightseeing), only for travel within India, and only twice in a block of four calendar years. Here's exactly what qualifies.
What LTA Exemption Covers
Section 10(5) exempts the value of travel concession or assistance received by an employee for proceeding on leave to any place in India, for themselves and their family, subject to conditions. Crucially, the exemption is limited to the actual cost of travel by the shortest route to the destination — and only for the following modes:
- Air travel: Economy class fare of the national carrier (Air India) by the shortest route, or actual amount spent, whichever is lower
- Rail travel: AC First Class fare by the shortest route, or actual amount spent, whichever is lower
- Other modes (where rail isn't connected): First class or deluxe class fare of a recognized public transport system, or AC First Class rail fare for the equivalent distance, whichever is lower
⚠ What's NOT covered: Hotel/accommodation costs, food and meals, local sightseeing, taxi/cab fares at the destination, visa fees, and travel insurance are NOT eligible for LTA exemption — only the to-and-fro transportation cost between your place of work/residence and the destination.
The Block-of-4-Years Rule
LTA exemption can be claimed for two journeys in a block of four calendar years (not financial years). The current block years are set by the government — for example, 2022-2025 is one such block. If you don't use both exemptions within a block, one unused exemption can be carried forward to the first year of the next block, provided it's used in that very first year (this is sometimes called the 'carry-over concession').
ExampleIn the block 2022-2025, Neha used her LTA exemption only once (in 2023). She can carry forward the unused exemption and use it in 2026 (the first year of the next block, 2026-2029) — giving her potentially three exemptions available in 2026 itself (one carried forward + the two for the new block, though she'd need to time the journeys correctly and document them as separate claims).
Family Members Covered
LTA exemption covers travel for the employee and their family, defined as: spouse, children (with restrictions — generally not more than two children born after 1 October 1998, though children born before this date and multiple births are exempted from this restriction), and dependent parents, brothers, and sisters.
Domestic Travel Only
LTA exemption is available only for travel within India. International travel, even if part of a longer trip that includes a domestic leg, does not qualify for the domestic portion's exemption beyond what would have been incurred for travel to the farthest domestic point on the same route.
Documents Required
- Travel tickets (flight/train/bus) showing dates, names of travelers, and amounts
- Boarding passes (for air travel, as proof of actual travel undertaken)
- A declaration to the employer (in the prescribed format) confirming the journey details
- Note: Since the abolition of the requirement to submit physical proofs to the income tax department directly (employers retain these for their records and TDS computation), maintain copies for at least the limitation period in case of a query
Old Regime vs New Regime
LTA exemption under Section 10(5) is not available under the new tax regime. If you opt for the new regime, the LTA component of your salary is fully taxable, just like basic salary.
Common Mistakes
- Claiming LTA for a trip that includes international travel without restricting the claim to the domestic leg
- Including hotel and food bills in the LTA claim
- Not tracking which block years exemptions have already been used in
- Claiming LTA in the new tax regime
Frequently Asked Questions
Can I claim LTA exemption for hotel stays and food during my vacation? ▼
No. LTA exemption under Section 10(5) covers only the cost of travel (transportation) to and from the destination — by air, rail, or other recognized public transport, subject to specified class limits. Hotel accommodation, food, local sightseeing, and other vacation expenses are not eligible for LTA exemption, even if you submit bills for them. Only the transportation fare component of your trip can be claimed.
What happens if I don't use my LTA exemption in a block of 4 years? ▼
If you have an unused LTA exemption at the end of a block of 4 years (having used it for, say, only one of the two permitted journeys, or none at all), you can carry forward one unused exemption to use in the immediately following calendar year — which is the first year of the next block. This is known as the carry-over concession, but it must be utilized in that first year of the new block; it cannot be carried forward indefinitely.
Is LTA exemption available if I choose the new tax regime? ▼
No. The LTA exemption under Section 10(5) is one of the allowances specifically excluded under the new tax regime (Section 115BAC). If your salary structure includes an LTA component and you opt for the new regime, that amount is added to your taxable salary just like any other fully-taxable allowance, with no exemption regardless of whether you actually undertake eligible travel.