Hi
I am a student doing my MBA currently doing a compensation project. I wish to know the difference between LTA and LTC reimbursement.
What are the limits for each .How frequently can LTC be reimbursed.
Regards
Jenny
I am a student doing my MBA currently doing a compensation project. I wish to know the difference between LTA and LTC reimbursement.
What are the limits for each .How frequently can LTC be reimbursed.
Regards
Jenny
usually companies in india allot Rs:15,000 per annum towards Leave Travel Allowance .
Note since its is a part of Cost to Company it is known as allowance.
The limit is fixed as per tax laws prevailing.
hope this info helps.
From India, Mumbai
1Note since its is a part of Cost to Company it is known as allowance.
The limit is fixed as per tax laws prevailing.
hope this info helps.
From India, Mumbai
As far as my knowledge goes LTA is leave travel allowance, which is given to the employee by the employer for travelling purpose. Generally, it is given once in four years.
LTC is leave on credit.Under this E.g You can take 10 leaves in a year. now , every company has its own rule. Let say you took 4 leaves inthe year. You are still left with 6. Now, if the financial year for which they are assigned gets over, there are different options-
From India, Ahmadabad
LTC is leave on credit.Under this E.g You can take 10 leaves in a year. now , every company has its own rule. Let say you took 4 leaves inthe year. You are still left with 6. Now, if the financial year for which they are assigned gets over, there are different options-
- 1.The remaining 6 Leaves stands cancelled
2.They are credited to your next year account i.e. in next year you can have 6+10 leaves
3.You can be reimbursed for the remaining 6 days.
From India, Ahmadabad
LTA= Leave Travel Allawance [Have given FAQs for the same]
LTC = Leave Travel Concession [check this PDF, it is the ordinance LVII concerning Leave Travel Concession http://jmi.nic.in/Ordinance/57_LVII.pdf ]
As far as difference is concerned, both are same with different names as the purpose is to give allowance to the employees for taking vacations.
FAQs about LTA
Basically, it is a monetary benefit that you get on the expenses you incur when you travel.
Here's to clearing your doubts.
1. On what basis can I claim LTA?
If you fulfill two criteria, you can do so:
You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.
2. How often can I claim LTA?
Twice in the block of four calendar years.
This block is not calculated with the start of your employment. The government defines these blocks.
Presently the block is 2002-2005. Since it is the calendar year and not the financial year, it will be from January 1, 2002 to December 31, 2005.
3. What if I fail to avail of it?
In case you fail to do so, there is a carry over option.
Let's say that in the block of four years, you never did claim any LTA.
You can do so in the first year of the next block of four years.
4. What is the proof of travel to avail of LTA?
According to rule 2B, you can produce an air, rail or any public transport ticket.
You can even submit the bills issued by the car rental company if you rent a vehicle.
However, the travel is applicable anywhere in India and not abroad. So an international air ticket will not hold.
5. Is LTA taxed?
You can receive LTA as either reimbursement or allowance.
Reimbursement
In case of LTA as reimbursement, it is not taxable.
Let's say your company offers an LTA of Rs 50,000. For proof of travel, you produce an air ticket of Rs 10,000.
In such a case, you can claim only Rs 10,000 as LTA and it will be exempt from tax.
Allowance
If you do not submit any proof of travel, you will get your LTA but will have to pay tax on it.
If you produce proof of travel, it will not be taxable to the extent your proof of travel is covered.
Let's say you are entitled to Rs 50,000 as LTA as part of your salary. Since you produced proof of travel as Rs 10,000, you will not be taxed on this amount. However you will be taxed on the net Rs 40,000 as per your income tax slab rate.
LTA is not a fringe benefit as the latter are benefits that are usually enjoyed collectively by the employees and cannot be attributed to individual employees.
6. Can both spouses claim LTA?
If both spouses are getting the LTA benefit in their places of work, they can both claim exemption on LTA from their employers and the benefit for four journeys in one block.
They do not have to take the precaution of not travelling twice during the same year.
Moreover, they can take the same family members or different ones as long as they stick to the definition of the members for this purpose.
Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after October 1, 1998, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births (twins or triplets).
7. If I and my wife travel this year, can we both claim LTA simultaneously?
No. You cannot claim LTA twice for the same journey. If both of you take a holiday together and you claim LTA, she cannot.
8. If I am entitled to a particular amount as LTA, but my expenses are higher, can I claim more?
Say in the year 2005-06, you receive on Rs 8,000 as LTA, but spend Rs 50,000 on travel. You can claim exemption only to the tune of Rs 8,000.
For LTC check the LTC ordinance at http://jmi.nic.in/Ordinance/57_LVII.pdf
From India, Ahmadabad
LTC = Leave Travel Concession [check this PDF, it is the ordinance LVII concerning Leave Travel Concession http://jmi.nic.in/Ordinance/57_LVII.pdf ]
As far as difference is concerned, both are same with different names as the purpose is to give allowance to the employees for taking vacations.
FAQs about LTA
Basically, it is a monetary benefit that you get on the expenses you incur when you travel.
Here's to clearing your doubts.
1. On what basis can I claim LTA?
If you fulfill two criteria, you can do so:
- i. You should have taken leave from your company
ii. You should actually travel
You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.
2. How often can I claim LTA?
Twice in the block of four calendar years.
This block is not calculated with the start of your employment. The government defines these blocks.
Presently the block is 2002-2005. Since it is the calendar year and not the financial year, it will be from January 1, 2002 to December 31, 2005.
3. What if I fail to avail of it?
In case you fail to do so, there is a carry over option.
Let's say that in the block of four years, you never did claim any LTA.
You can do so in the first year of the next block of four years.
4. What is the proof of travel to avail of LTA?
According to rule 2B, you can produce an air, rail or any public transport ticket.
You can even submit the bills issued by the car rental company if you rent a vehicle.
However, the travel is applicable anywhere in India and not abroad. So an international air ticket will not hold.
5. Is LTA taxed?
You can receive LTA as either reimbursement or allowance.
Reimbursement
In case of LTA as reimbursement, it is not taxable.
Let's say your company offers an LTA of Rs 50,000. For proof of travel, you produce an air ticket of Rs 10,000.
In such a case, you can claim only Rs 10,000 as LTA and it will be exempt from tax.
Allowance
If you do not submit any proof of travel, you will get your LTA but will have to pay tax on it.
If you produce proof of travel, it will not be taxable to the extent your proof of travel is covered.
Let's say you are entitled to Rs 50,000 as LTA as part of your salary. Since you produced proof of travel as Rs 10,000, you will not be taxed on this amount. However you will be taxed on the net Rs 40,000 as per your income tax slab rate.
LTA is not a fringe benefit as the latter are benefits that are usually enjoyed collectively by the employees and cannot be attributed to individual employees.
6. Can both spouses claim LTA?
If both spouses are getting the LTA benefit in their places of work, they can both claim exemption on LTA from their employers and the benefit for four journeys in one block.
They do not have to take the precaution of not travelling twice during the same year.
Moreover, they can take the same family members or different ones as long as they stick to the definition of the members for this purpose.
Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after October 1, 1998, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births (twins or triplets).
7. If I and my wife travel this year, can we both claim LTA simultaneously?
No. You cannot claim LTA twice for the same journey. If both of you take a holiday together and you claim LTA, she cannot.
8. If I am entitled to a particular amount as LTA, but my expenses are higher, can I claim more?
Say in the year 2005-06, you receive on Rs 8,000 as LTA, but spend Rs 50,000 on travel. You can claim exemption only to the tune of Rs 8,000.
For LTC check the LTC ordinance at http://jmi.nic.in/Ordinance/57_LVII.pdf
From India, Ahmadabad
Hi Ajmal,
The reply given by you was so simple and very informative. Plz let me know some more things on LTA:
1. Is the company obligated to pay LTA?
2. If Yes, should it register itself in any of the govt bodies [something like PF]
3. If No, and as an employee I want to avail this benefit, is there anything that I can do.
Regards,
Soumya Shankar
From India, Bangalore
The reply given by you was so simple and very informative. Plz let me know some more things on LTA:
1. Is the company obligated to pay LTA?
2. If Yes, should it register itself in any of the govt bodies [something like PF]
3. If No, and as an employee I want to avail this benefit, is there anything that I can do.
Regards,
Soumya Shankar
From India, Bangalore
Ajmal,
Can you kindly throw some light on Fringe Benefit Tax...
How is it going to affect Employees, whats the hitch for the employers, how to plan & resturcture salary etc...?
Also kindly pass em some template for payroll purposes.
I need to process payroll for the start up i work with. I also want to give them pay slips..
Help me with Both..plz.
Gayathri
From India, New Delhi
Can you kindly throw some light on Fringe Benefit Tax...
How is it going to affect Employees, whats the hitch for the employers, how to plan & resturcture salary etc...?
Also kindly pass em some template for payroll purposes.
I need to process payroll for the start up i work with. I also want to give them pay slips..
Help me with Both..plz.
Gayathri
From India, New Delhi
Hi Somya
Sorry for the delay in replying...
I am working on a urgent project and am not able to get sufficient time for replying here.... But by next week things should be smoother
1. No, the company is not obligated to pay LTA as per indian law, but generally companies having branches in different geographies and / or having large number of employees from outside the state, do provide with LTA which is then mainly used to visit home town.
3. Availing this benefit, talk with your HR guys and see if something can be added to your compensation structure. Many of the IT companies in Bangalore offer flexible compensation structure wherein you can pick-up your own benefits, limited to fixed CTC.
From India, Ahmadabad
Sorry for the delay in replying...
I am working on a urgent project and am not able to get sufficient time for replying here.... But by next week things should be smoother
1. No, the company is not obligated to pay LTA as per indian law, but generally companies having branches in different geographies and / or having large number of employees from outside the state, do provide with LTA which is then mainly used to visit home town.
3. Availing this benefit, talk with your HR guys and see if something can be added to your compensation structure. Many of the IT companies in Bangalore offer flexible compensation structure wherein you can pick-up your own benefits, limited to fixed CTC.
From India, Ahmadabad
:D
Hi Som,
In addition to the Ajmal reply i want ot add few point, However Ajmal reply is 100% correct,
As said LTA(Leave Travelling Allowance) should be/not a part of your CTC depends upon comapies policy because it is taxable amount, in which some company gives 10/15/20 % of your basic as your LTA,
LTC is some part of it is given by company and the balance is beared by the individidual, it also depends upon the company policy, For that you have to check with HR/Admn. Dept.
From India, Mumbai
Hi Som,
In addition to the Ajmal reply i want ot add few point, However Ajmal reply is 100% correct,
As said LTA(Leave Travelling Allowance) should be/not a part of your CTC depends upon comapies policy because it is taxable amount, in which some company gives 10/15/20 % of your basic as your LTA,
LTC is some part of it is given by company and the balance is beared by the individidual, it also depends upon the company policy, For that you have to check with HR/Admn. Dept.
From India, Mumbai
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Leave Travel Allowance.doc
The Ins & Outs of Leave Travel Allowance.pdf