Hi all,
I have a question regarding claiming LTA as taxable. My wife's CTC comes under 1.5 Lakh (Below tax brackets) and the company is cutting Rs. 700 per month for LTA.
My question is, as she doesn't come under any tax bracket, can she ask for her accumulated LTA (taxable) to be released with her salary, with out giving any bills or taking any leaves?
Her company HR is saying it LTA cannot be released without taking leaves and producing bills. Is it proper? (Because even I claimed my accumulated LTA as taxable in my company on request). Is company can make their own policies on releasing LTA?
Since this is part of the CTC, what will happen to the accumulated LTA, if the employee leaves the company? They should get the total LTA with their final settlement right? Can company can make their own policies on these? unless it's is specifically mentioned on the appointment letter.
Please advise me.
Regards
Bijesh
From India
1I have a question regarding claiming LTA as taxable. My wife's CTC comes under 1.5 Lakh (Below tax brackets) and the company is cutting Rs. 700 per month for LTA.
My question is, as she doesn't come under any tax bracket, can she ask for her accumulated LTA (taxable) to be released with her salary, with out giving any bills or taking any leaves?
Her company HR is saying it LTA cannot be released without taking leaves and producing bills. Is it proper? (Because even I claimed my accumulated LTA as taxable in my company on request). Is company can make their own policies on releasing LTA?
Since this is part of the CTC, what will happen to the accumulated LTA, if the employee leaves the company? They should get the total LTA with their final settlement right? Can company can make their own policies on these? unless it's is specifically mentioned on the appointment letter.
Please advise me.
Regards
Bijesh
From India
There are different treatments to LTA. Conventionally, LTA is treated as part of employee benefits and is paid once in two years on production of bills in support of journey subject to a maximum of one's basis salary. Under this system, LTA is not shown as part of salary. Most of the traditional HRs follow this system. On the other hand, LTA is shown as part of 'CTC' by which the total cost to company is projected and from which LTA is deducted every month and finally, may be by end of year, the same is summed up and paid back. I understand that the rationale of doing so is to project a high salary. When employee receives salary (take home) he will get only the net after deducting the LTA along with other statutory contributions. Now, the recent Supreme Court verdict stating that employer is not bound to collect bills in support of the journey is applicable wherever tax is impossed on such allowances. Under the first concept of LTA also, the employer insists travel bills for sanctioning of LTA. There is genuineness in doing so because, LTA is an employee benefit and not part of salary. Under the second concept, certainly, even if the Supreme Court verdict is not applied, the employer can not ask for travel bills because LTA is a deduction from salary. Any amount deducted from salary should be refunded. It should not be conditional (as to availing of leave) also. I use to advise all HRs to work on it so that any benefits shall be put separate from salary and let the offer/ pay be small but the out come will be good. If any body challenges the act of an HR deducting an amount not allowed as permitted deduction in Payment of Wages Act as is the case of LTA, how will you defend it? Regards, Madhu.T.K
From India, Kannur
From India, Kannur
Dear All,
Plz go through the LTA claim process
1) LTA Claim shall be admissible as a reimbursement within the choice pay option exercised by the employee.
2) Availment of 5 days PL / EL is mandatory in case rebate is being claimed. Rebate will be provided only in respect of traveling expense incurred during the leave period; Submission of tickets/bills/receipts in original are mandatory for claiming rebate; Rebate shall be permissible as per IT provisions;
3) Only one claim is admissible during a Financial Year subject to an Income Tax provision. The rebate can be claimed twice in a block of 4 calendar years. The current block of 4 years is applicable w.e.f 2006.
However Tax exemption will differ -
Rule -
1) Two Exemption are allowed in the block of 4 years- 2006-2009.
2) One Journey in a year is allowed for claiming LTA reimbursement.
3) First class A/C fare for train / Economy class Air fare / state transport tickets etc to be attached with claim form.
However recently there was a verdict from Supreme court where it stated that to claim LTA, employee is not bound to submit the proof related to same to the employer.
Even employees have the options to withdraw LTA as a taxable components. They just have to intimate their employer about their desire in claiming the LTA (taxabale) in their current salary.
From India, Thana
Plz go through the LTA claim process
1) LTA Claim shall be admissible as a reimbursement within the choice pay option exercised by the employee.
2) Availment of 5 days PL / EL is mandatory in case rebate is being claimed. Rebate will be provided only in respect of traveling expense incurred during the leave period; Submission of tickets/bills/receipts in original are mandatory for claiming rebate; Rebate shall be permissible as per IT provisions;
3) Only one claim is admissible during a Financial Year subject to an Income Tax provision. The rebate can be claimed twice in a block of 4 calendar years. The current block of 4 years is applicable w.e.f 2006.
However Tax exemption will differ -
Rule -
1) Two Exemption are allowed in the block of 4 years- 2006-2009.
2) One Journey in a year is allowed for claiming LTA reimbursement.
3) First class A/C fare for train / Economy class Air fare / state transport tickets etc to be attached with claim form.
However recently there was a verdict from Supreme court where it stated that to claim LTA, employee is not bound to submit the proof related to same to the employer.
Even employees have the options to withdraw LTA as a taxable components. They just have to intimate their employer about their desire in claiming the LTA (taxabale) in their current salary.
From India, Thana
Thanks a lot Madhu.
As you mentioned, in this case, the LTA is included in the CTC, as employer's contribution -annual. My wife is new to this company and everyone in that company is giving bills and taking leaves for claiming the LTA. And when confirmed with HR he said it's the company's policy. So to get that amount, employees are forcefully taking leaves.
Even there is a medical allowance (which is in CTC) getting cut from monthly salary. For that also they are insisting bills to get that amount reimbursed (even if you are not availing tax benefits). This can be done on a 3 months basis, but no bills, no reimbursement.
Is this can be a company policy? Is there way to challenge this?
Thanks in advance.
Bijesh
From India
As you mentioned, in this case, the LTA is included in the CTC, as employer's contribution -annual. My wife is new to this company and everyone in that company is giving bills and taking leaves for claiming the LTA. And when confirmed with HR he said it's the company's policy. So to get that amount, employees are forcefully taking leaves.
Even there is a medical allowance (which is in CTC) getting cut from monthly salary. For that also they are insisting bills to get that amount reimbursed (even if you are not availing tax benefits). This can be done on a 3 months basis, but no bills, no reimbursement.
Is this can be a company policy? Is there way to challenge this?
Thanks in advance.
Bijesh
From India
LTA
In our organisation LTA is a part of CTC and is paid on monthly basis and shown in salary slip as earning component.
Now some employees want to have tax exemption for the same. Since its already paid, considered part as income and tax is calculated and deducted too, our C.A. has advised at least for this F.Y. we should not consider LTA for Tax Exemption. Is it OK legally or is there any other solution this being last month of F.Y. 2008-09.
Secondly i have proposed a scheme to be implemented from next F.Y. 2009-10 that at the begining of F.Y. blocks to be declared 1st will be only 2009 next will be 1.1.2010-31.12.2011 and choice to be given to employee as to whether they want it as income in monthly salary OR as reimbursement on declaration as per Supreme Court Judgement. Records to be maintained by HR. I m attaching the formats please advise me as early as possible. You can even mail me on
/ 
Thnaks
Regards
Pari
From India, Mumbai
In our organisation LTA is a part of CTC and is paid on monthly basis and shown in salary slip as earning component.
Now some employees want to have tax exemption for the same. Since its already paid, considered part as income and tax is calculated and deducted too, our C.A. has advised at least for this F.Y. we should not consider LTA for Tax Exemption. Is it OK legally or is there any other solution this being last month of F.Y. 2008-09.
Secondly i have proposed a scheme to be implemented from next F.Y. 2009-10 that at the begining of F.Y. blocks to be declared 1st will be only 2009 next will be 1.1.2010-31.12.2011 and choice to be given to employee as to whether they want it as income in monthly salary OR as reimbursement on declaration as per Supreme Court Judgement. Records to be maintained by HR. I m attaching the formats please advise me as early as possible. You can even mail me on
Thnaks
Regards
Pari
From India, Mumbai
Dear Bijesh,
I have seen a lot of similar cases wherein employees join companies finding that the salary offered is very high but later on they understand that the amount offered was the estimated cost of the company due to their employment! I am totally against this present concept, the so called CTC. In the past, all these items, viz, LTA, Medical Reimbursement etc, will be taken as 'other benefits' available to an employee whereas actual salary (certainly gross salary) will only be offered. One can easily calculate the net take home by deducting the statutory contributions towards EPF/ ESI, TDS etc. Now it is not possible. Now, even the gratuity, which becomes due only when he leaves (that also after a minimum service period of five years) is also shown as part of package and every month an amount is deducted!!! This is going to be yet another issue before such new generation HRs because, if any body claims the amount so deducted even before five years of service, the employer will be bound to pay it without any compromise. The very concept of CTC itself is cheating and I had earlier put my view in an article titled "CTC vs BTC" which is available in my blog in the following link.
http://citehr.com <link updated to site home>
If LTA is a part of salary, and every month an amount is deducted, then it is to be paid irrespective of travel and production of travel bills. Similarly, if medical reimbursement is deducted, the employee should get it back. On the otherhand, if these are not shown as part of salary and not shown in the pay slip, then the HR can demand supporting bills.
Regards,
Madhu.T.K
From India, Kannur
I have seen a lot of similar cases wherein employees join companies finding that the salary offered is very high but later on they understand that the amount offered was the estimated cost of the company due to their employment! I am totally against this present concept, the so called CTC. In the past, all these items, viz, LTA, Medical Reimbursement etc, will be taken as 'other benefits' available to an employee whereas actual salary (certainly gross salary) will only be offered. One can easily calculate the net take home by deducting the statutory contributions towards EPF/ ESI, TDS etc. Now it is not possible. Now, even the gratuity, which becomes due only when he leaves (that also after a minimum service period of five years) is also shown as part of package and every month an amount is deducted!!! This is going to be yet another issue before such new generation HRs because, if any body claims the amount so deducted even before five years of service, the employer will be bound to pay it without any compromise. The very concept of CTC itself is cheating and I had earlier put my view in an article titled "CTC vs BTC" which is available in my blog in the following link.
http://citehr.com <link updated to site home>
If LTA is a part of salary, and every month an amount is deducted, then it is to be paid irrespective of travel and production of travel bills. Similarly, if medical reimbursement is deducted, the employee should get it back. On the otherhand, if these are not shown as part of salary and not shown in the pay slip, then the HR can demand supporting bills.
Regards,
Madhu.T.K
From India, Kannur
Dear Friend,
As per my knowledge most of the organizations provide IT Declaration form when any one joins the organisation and that form have an option whether you want to claim your medical and LTA monthly or actual on submission of proof to avail tax benefit.
If any employee is not in tax bracket he/she can claim all the allowances monthly without submission of any bills.
With kind regards,
Nitin.
From India, Pune
As per my knowledge most of the organizations provide IT Declaration form when any one joins the organisation and that form have an option whether you want to claim your medical and LTA monthly or actual on submission of proof to avail tax benefit.
If any employee is not in tax bracket he/she can claim all the allowances monthly without submission of any bills.
With kind regards,
Nitin.
From India, Pune
I agree with Nitin, As per the new order passed by the supreme court of India, we can claim LTA even without submitting the proof of Journey till 15000
From India, Hyderabad
From India, Hyderabad
Goodeving to all,
Can ny1 let me know wht doea tax reimbesment & tax rebate means as I am new to coprate world and unfortunately confused?
What happens in this procedure..
Also I would like to know as an employee point of view what wuld be the best from employer side
- Is it good to add LTA allowance on monthly basis or deduct it and thn pay it latron.
In the deduction part, aftr an year or so shall we get our money deduted back?What we need to do for that?Do we hav to submit our bills to HR?
Also if its added in ctc and provided on monthly basis..can v get the amount back whnevr we go fr a vacation ?
Also, How can we save tax on basis of LTA when it is added in CTC.In such situation to whom we have to submit our trip bills?
Kindly help me with my above queries.
Rashmi
From India, Mumbai
Can ny1 let me know wht doea tax reimbesment & tax rebate means as I am new to coprate world and unfortunately confused?
What happens in this procedure..
Also I would like to know as an employee point of view what wuld be the best from employer side
- Is it good to add LTA allowance on monthly basis or deduct it and thn pay it latron.
In the deduction part, aftr an year or so shall we get our money deduted back?What we need to do for that?Do we hav to submit our bills to HR?
Also if its added in ctc and provided on monthly basis..can v get the amount back whnevr we go fr a vacation ?
Also, How can we save tax on basis of LTA when it is added in CTC.In such situation to whom we have to submit our trip bills?
Kindly help me with my above queries.
Rashmi
From India, Mumbai
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