Definition
LTA
Leave Travel Allowance is a salary component that can be tax-exempt for the cost of travel within India undertaken on leave, subject to conditions and block-year limits.
LTA lets you claim tax exemption on the travel fare (not food, stay or local transport) for journeys within India taken with family while on leave. The exemption is limited to the actual fare for the eligible mode and is available for a set number of journeys within a government-defined block of years.
You must submit proof of travel to your employer, and the exemption applies only under the old tax regime. Unused LTA in a block can sometimes be carried over by one journey into the next block under specific rules.
LTA rewards domestic travel with a tax break, but the conditions are strict — international travel and non-fare expenses do not qualify.
Related terms
- Old vs New Tax RegimeIndia offers two personal income-tax regimes: the old one with various deductions and exemptions, and the new one with lower slab rates but most exemptions removed.
- HRA ComponentHouse Rent Allowance is a salary component meant to cover rent that can be partly tax-exempt if you actually pay rent, with the exemption based on a prescribed formula.
- Perquisites (Perks)Perquisites are non-cash benefits or amenities provided by an employer — like company car, accommodation or interest-free loans — that are valued and taxed as part of salary.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.