When we think about income tax exemptions, most salaried individuals assume tax benefits only come from investments like ELSS, PPF or insurance. Yet, one exemption often gets missed — the Leave Travel Concession (LTC).
Yes, you can reduce your tax legally just by traveling. But before that trip is booked & the excitement takes over — let's understand the rule properly.
What Is LTC (Leave Travel Concession)?
LTC stands for Leave Travel Concession, a benefit employers offer to employees to meet travel expenses when they take leave from work.
And here’s the interesting part —
Leave Travel Concession is tax-exempt under the Income Tax Act.
Meaning, you get paid to travel & save tax if you meet the rules.
The relevant clause is commonly referred to as the LTC income tax section, and it is specifically designed to encourage employees to take periodic time off and explore India.
Core Benefit of LTC (In Simple Words)
“This section allows salaried individuals who opt for the old tax regime to claim tax benefits on the travel expenses incurred for themselves & their families during a period of leave, subject to several conditions.”
There’s a lot packed in that one sentence.
Let’s break it down:
|
Term |
Meaning |
|
Salaried individuals only |
This exemption is not available to self-employed persons. |
|
Old tax regime |
LTC benefit is NOT available if you choose the new tax regime. |
|
Travel expenses |
Only ticket cost is allowed (economy class air/train/bus). |
|
Family included |
You can claim for spouse, children, and dependent parents. |
Also Read: LTA Section in Income Tax: Save Tax on Travel the Right Way!
Is The Entire Trip Tax-Exempt? No.
A lot of people make this mistake.
The law does not exempt hotel stays, cab bookings, food, sightseeing, or packages.
Only travel tickets qualify.
The LTC income tax section provides tax exemption for Leave Travel Concession, but only for the transportation portion of the journey.
So yes — air tickets, train tickets, bus tickets.
Not restaurants, not stay, not travel agents’ package plans.
Conditions That MUST Be Met (Otherwise No Exemption)
You must satisfy all these:
- The employee must actually travel during leave.
- Travel must be within India (international travel is not allowed).
- Only the actual travel ticket cost is eligible.
- Journey must be performed with family (or alone — family is optional).
- Bills/tickets/boarding passes must be maintained.
The government wants proof that a journey occurred.
No journey = No exemption.
Who Is Considered "Family"?
Family includes:
- Spouse
- Children (only up to 2 children for those born after Oct 1998)"
- Dependent parents
- Dependent brothers & sisters
No upper age limit for parents.
Example: How LTC Exemption Works
Rohit (salary ₹10,00,000) takes LTC worth ₹60,000.
He travels to Amritsar with family.
Cost of economy air tickets = ₹42,000
He submits tickets & boarding passes to HR.
💡 Result:
- LTC exempt from tax = ₹42,000
- Balance ₹18,000 becomes taxable as salary.
He saves tax of around ₹13,000 (based on his slab).
All he did was travel smart.
How Many Times Can You Claim LTC?
LTC follows a block system of 4 years.
Current block: 2022–2025
You can claim twice in a block.
Missed a block?
You can carry forward one claim to the next block — but only for the first year.
Also Read: Section 10(12A): The Tax-Free Exit Door for NPS Withdrawals
Common Mistakes That Lead to Rejections
|
Mistake |
Result |
|
Submitting package tour bills instead of ticket invoices |
Rejected |
|
Traveling abroad |
Rejected |
|
Choosing new tax regime |
LTC not allowed |
|
No ticket proof / no boarding passes |
Rejected |
HR doesn’t approve without proof.
Income Tax Department also doesn’t.
Can You Claim LTC While Working from Home?
Yes — provided:
- Leave is sanctioned, and
- Travel actually happens.
Planning Strategy to Maximize Exemption
Treat LTC as a planned tax saving tool, not just a vacation.
Tips:
- Travel during peak ticket pricing (higher ticket cost = greater exemption).
- Prefer one major long-distance trip over multiple short trips.
- Keep all ticket invoices in email for record.
Documents You Must Keep
- Ticket copy (PDF)
- Boarding pass (mandatory for flights)
- Payment proof (bank statement/UPI receipt)
- Leave approval copy (if asked)
Also Read: Penalty for Failure to File TDS/TCS Returns
When LTC Gets Taxable?
If you don't meet conditions, the amount is added to your salary & taxed normally.
Frequently Asked Questions
- Is LTC available for foreign trips?
❌ No. Only domestic travel within India."
- Is LTC allowed under the new tax regime?
❌ No. Only under the old tax regime.
- Can LTC be claimed for road trips using a personal car?
❌ No. Tickets must be from a registered transporter.
Final Thoughts
LTC is one of those benefits that feels like a reward for taking a break.
- You save tax.
- You refresh your mind.
- You spend time with family.
And all of it — legally.
🔗 Want Experts to Plan Your Tax Saving Strategy? If you want to maximize LTC exemption, choose the right tax regime, avoid mistakes, & legally reduce tax — our CA team can help. Click here to connect with a tax expert on CallMyCA.com —“One call. Zero tax confusion.”
