The Income Tax Act of 1961 provides for various exceptions for the class of employees, in addition to deductions such as the LIC premium, interest on mortgages, etc. Although the deduction is reduced by total taxable income, the exemption means the exclusion of any taxable income. Such exemptions allow employers to structure employees` business costs (STCs) in a tax-efficient manner. One of these exceptions, which are available for the class of employees in accordance with the law and are also frequently used by employers, is vacation pay (LTA)/vacation travel reduction (LTC). The ATL exemption also applies to ATL received from a former employer after retirement or separation from service. No, there is only one ETA exemption for two trips made in a block of four calendar years. You can claim an LTA benefit for the travel expenses of yourself, your family, consisting of your spouse, children, dependent parents, siblings of the employee. Let`s understand the terms/requirements to apply for the exemption. For example, if the ETA is granted by the employer at Rs 30,000 and the actually eligible travel expenses incurred by the employee are Rs 20,000, the exemption is only available in the amount of Rs 20,000 and the balance of Rs 10,000 would be included in taxable salary income. A block year is different from a fiscal year and is set by the government for the purposes of exemption from the FTA. It lasts 4 years each. The very first 4-year block began in 1986.
The list of block years is 1986-1989, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09, 2010-13 and so on. The block applicable to the current period is the calendar year 2018-21. The previous block was the 2014-17 calendar year. The exemption applies only to actual travel expenses, i.e. the air, train or bus ticket incurred by the employee. No expenses such as local transportation, sightseeing, hotel accommodation, meals, etc. are eligible for this exemption. The exemption is also limited to LTAs provided by the employer. .
If a worker in one of the 4-year-old groups has not benefited from an exemption for one or two journeys, he has the right to transfer this exemption to the next block, provided that he makes use of this benefit during the first calendar year of the next block immediately. Let`s take the following example to better understand: You can only apply for the ETA exemption for travel in a calendar year. • If the transfer exemption is requested within the first calendar year of the group proceedings that immediately follow, the use of the ATL is usually specific to the employer. Each employer will announce the due date by which the ETA can be claimed by employees and may require employees to provide proof of travel such as tickets, boarding pass, travel agent invoice, etc. as well as mandatory reporting. While it is not mandatory for employers to collect proof of travel, employees are still advised to keep copies for their records and present them to the employer upon request based on the company/tax authorities` LTA policy. The income tax provision provides for an exemption for travel expenses incurred during holidays anywhere in India. The conditions of the mode of transport also refer to the „place of origin” of the „place of destination” and the route, which must be the shortest route available. The amount of the ETA exemption depends on the ETL component of your compensation plan or CTC. You can provide proof of travel during the lock-up period and claim up to the amount prescribed in your terms and conditions. Many organizations that strictly adhere to the wording of the income tax provision allow employees to claim an ETA only if the employee requests leave and travel during that period.
These organizations may reject LTA requests to travel on official holidays or weekends. The last four-year lock-up period runs from 1 January 2018 to 31 December 2021. As the name suggests, this is an exemption from the allowance/assistance that the employee receives from his employer for his holiday trips. While it sounds simple, there are many factors to consider before planning the trip for the purpose of applying for the AL exemption. The income tax provision established rules for the use of the ETA exemption. Thus, if an employee travels to different locations on a single holiday, the exemption can only be claimed for travel expenses incurred from the place of origin to the farthest place on vacation by the shortest possible itinerary. .