Exemption for Leave Travel Concession/Assistance (LTC) under Income Tax Act, 1961: Section 10(5) & Rule 2B

By | June 4, 2015

Leave Travel Concession is a facility given by the employer where in employee can travel anywhere in India with his employee for twice in a block of four years.

Income tax exemption for LTC is available u/s 10(5) from an amount received by an employee from his employer. The amount of exemption is available only if the amount received is in relation to:

  • Leave to any place within India
  • Any place in India after retirement from service or after the termination of his service.

Related Cases:

1.    S. 10(5), 10(14) & 192 of the IT Act, 1961—TDS—Whether the assessee was under statutory obligation under IT Act, 1961 and/or the rules to collect evidence to show that its employee had actually utilized the amount paid towards leave travel concession/conveyance allowance? Held that there is no circular of CBDT regarding the employer u/s 192 to collect and examine the supporting evidence to the declaration to be submitted by the employee—CIT vs. ITI Ltd. (SC)

2.    S. 10(5), 10(14) & 192 of the IT Act, 1961—TDS—Whether the assessee was under statutory obligation under IT Act, 1961 and/or the rules to collect evidence to show that its employee had actually utilized the amount paid towards leave travel concession/conveyance allowance? Held that there is no circular of CBDT regarding the employer u/s 192 to collect and examine the supporting evidence to the declaration to be submitted by the employee.

Reference:

As Per Section 10(5) & Rule 2B, of the Income Tax Act, 1961-

In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—

In the case of an individual, the value of any travel concession or assistance received by, or due to, him,—

(a)   From his employer for himself and his family, in connection with his proceeding on leave to any place in India;

(b)   from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

(c)   Subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government:

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

[Explanation.

For the purposes of this clause, “family”, in relation to an individual, means—

(i)  The spouse and children of the individual; and

(ii)  The parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;]

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