With the Central Government’s thrust on spiritual tourism and the development of iconic tourist centres, Indian taxpayers are likely to find better options to utilise the leave travel allowance that is received as part of the salary.
The middle class aspires to travel and explore, mentioned Finance Minister Nirmala Sitharaman in her interim budget speech on February 1, while allocating interest-free loans to create quality infrastructure, facilities, and services in tourism hubs including Lakshadweep islands.
Under the Leave travel allowance, one can claim expenses for a domestic trip for any two years between a block of four years. The current four-year block is calendar year 2022 to 2025. You can claim the expenses of domestic travel for yourself, your parents, spouse, and children. To claim the benefit for siblings, they need to be completely dependant on you.
If you are staying in expensive hotels aiming to claim LTA, you would be disappointed as only travel fares can be claimed. However, the benefit of LTA cannot be claimed if you have opted for the new tax regime.
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How much can be claimed?
Expenses for two travel trips can be claimed in a block of four years. However, there are limits applicable on the amount to be claimed.
If you travel by air, an amount spent on actual travel or the cost of an economy class ticket, whichever is lower can be claimed. For railway travel, the cost equivalent to the first-class train fare can be claimed.
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Preserve documents
While claiming the benefit, you need to preserve travel tickets. This is because if the income tax department questions you to prove a transaction and you cannot produce the documents within the 30-day mandated period, a penalty, apart from the applicable tax, needs to be paid.
Penalties of 50-200 percent are applicable if one cannot prove a transaction and is found to evade tax.
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