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Leave Travel Concession or Assistance, Section 10(5) and Rule 2B
Edu-Visor Update 08-01-2022
In some cases, the employer may provide leave travel concession or assistance to his employee for going on leave to any place in India either alone or with his family. The employee is entitled to exemption under section 10(5) in respect of the value of leave travel concession or assistance received from his employer.
Family for leave travel concession includes: employee's wife; Children of the employee (minor or principal, dependent or independent, married or unmarried); and the parents, brothers and sisters of the employee provided they are dependent on him.
No exemption is allowed for the third or subsequent child born on or after October 1, 1998. This rule will not be applicable in case of multiple births.
Quantum of Exemption
Exemption shall be least of the following:
A) Actual expenditure incurred on the performance of journey; or
B) Amount determined as per given below;
1) If journey is performed by air, extent of maximum exemption available is equal to economy fare charged by a National Carrier for the shortest route to the place of destination.
2) If journey is performed by any mode of transport other than air then
case 1; If the origin and destination of the journey are connected by rail, the limit of maximum discount available is the first class AC fare charged by Indian Railways for the shortest route to the destination.
case 2; If the origin and destination of the journey are not connected by rail, then the maximum exemption limit available is as follows:
a) If exiting a recognized public transport system, first class or deluxe class fare is charged by such recognized public transport system for the shortest route to the destination.
b) If the recognized public transport system does not exit, an amount equal to the first class AC fare charged by the Indian Railways for the shortest route
If the Leave Travel Concession is encashed without traveling, the entire amount received by the employee will be taxable. The above exemption is admissible only in respect of travel expenses. Expenses on boarding, lodging, commuting from residence to railway station/airport/bus stand and other expenses incurred during the journey will not be eligible for exemption.
The assessee can claim exemption in respect of any two journeys in a block of 4 years. If the assessee has not availed the leave travel concession exemption in a particular block, then maximum one journey can be carried forward and such onward journey should be done within the first year of the next block. Such onward journey will not be taken into account for determining the tax exemption of two journeys for the next block.
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