Leave travel allowance or LTA is the TAX exemption for those travelers who have made trip in India with their family. This allowance can be taken when the employee deposit their trip tickets has deposited to the employer after the trip. So that taxpayer can save their tax on the income tax return. This deduction motivates people to explore around the India in order to make the finance revolve into the country.
But as we know in the F.Y 2020-21 everybody was suffered by the corona crises. And in this tragic situation nobody was able to have any trip then how they can claim exemption on LAT. That is why government has launched a “LTA cash voucher scheme” In which the taxpayers can claim exemption on LTA by spending the particular amount on the certain goods without undertaking any trip.
As we all have introduced with the new budget 2021 and as the part of this budget 2021 government has extended this benefit to the all private and public sector employees.
These followings are the detailed information about leave travel allowance.
• LTA is a exemption which should be use I the financial year 20-21.
• The cash voucher scheme should avail at the trip which was made during the 4 calendar year which is starts from 2018-2021.
• The taxpayer should have incurred a specified expenditure.
• The taxpayer must have spent the amount on the purchase of goods and service which attracts the GST rate of 12% or more the 12%.
• These purchases must have done between the period of 12october 2020- 31 march 2021.
• This exemption should not be more than the amount of 36000 per person or the 1/3 of the specified expenditure whichever is lesser.
• The payment on these expenses must have done via electronic medium and also the necessary tax invoice should have.
• There is also the point to be noted is this LTA scheme is only available for those employees who receives the LTA with the salary package. And if you have opted new tax regime then you are also not eligible for the scheme.
You must have thinking about the “specified expenditure” which means the particular amount which is required to be spent.
How to calculate specified expenditure?
Annual salary is =1, 00,000 and the maximum number of the family member including taxpayer allowed for the LTA is 4 so the maximum benefit are allowed as 4 X 36000= 1, 44,000
Therefore money should be spent to claim tax benefit is = 1, 00,000 X 3= 3, 00,000. This amount is should be reduce if the spent amount is lesser then shown above.
Suppose if the entire amount spent is 3, 00,000 then the 1, 00,000 will be tax free. Which mean you will be able save your just 30,000 by spending the amount 3, 00,000.
Where should spend to claim “LTA cash voucher cash scheme”.
• Hotel 18%
• Mobile and laptops 18%
• Air conditioner and refrigerator 28%
• Interior designing service 18%