If your salary slip has an LTA line, that money can be tax-free — but only if you travel, keep the bills, and claim it the right way. Many salaried employees lose this exemption every year because they never submit the tickets, or they try to claim hotel bills that do not count. This guide explains the Leave Travel Allowance (LTA) exemption in plain words: what it covers, how much is tax-free, the 2026–2029 block, and the documents you need.
Quick answer: LTA exemption makes the travel fare your employer pays for your leave travel tax-free. The exempt amount is the lowest of three figures: your LTA component, the actual fare you paid, or the fare cap. Only the fare counts — hotels and food do not. Old regime only, for two journeys in the 2026–2029 block.
What is LTA and what does it exempt?
Leave Travel Allowance, also called Leave Travel Concession (LTC), is the money your employer gives you to travel while you are on leave. Under Section 10(5) of the Income-tax Act, 1961, the value of that travel concession is exempt from tax — but only for travel within India, and only for the fare itself.
From 1 April 2026, the Income-tax Act, 2025 applies. The exemption continues under the new Act in Section 11 read with Schedule III, Table Sl. No. 8, as per the Income Tax Department’s official section mapping. For returns of FY 2025-26, the familiar Section 10(5) still applies. The rules stay the same either way: fare only, India only, old regime only.
What counts as fare? The cost of your tickets — economy-class air fare, AC First Class rail fare, or first-class or deluxe bus fare — for the shortest route to your destination and back. What does not count? Hotel stays, food, local sightseeing, entertainment, and taxis at your destination. A Rs 40,000 holiday where Rs 15,000 was the flight and Rs 25,000 was the hotel gives you an exemption of Rs 15,000 at most, not Rs 40,000.
You must actually take the journey, and you must be on leave. A ticket booked in your name that you never used does not qualify. And the trip must be within India. A holiday abroad gets no exemption, except for one small part: the fare up to the Indian airport from which you board your foreign flight.
How much LTA is tax-free?
There is no fixed rupee limit for LTA. The exempt amount is the lowest of three figures:
- The LTA component your employer pays you.
- The actual travel fare you spent.
- The fare cap for your mode of travel under Rule 2B (renumbered as Rule 278 under the Income-tax Rules, 2026).
Whichever of the three is smallest is what you can claim tax-free. The rest of your LTA component is added back to your salary and taxed as usual.
Worked example 1 — actual fare is the smallest. Your LTA component is Rs 60,000. Your family of four flies Delhi to Goa and back in economy class for Rs 48,000 in total. The shortest-route economy cap for that route is Rs 52,000. The lowest of Rs 60,000, Rs 48,000 and Rs 52,000 is Rs 48,000. So Rs 48,000 is exempt and Rs 12,000 is taxable.
Worked example 2 — the fare cap is the smallest. Your LTA component is Rs 80,000. You fly business class and spend Rs 1,10,000 on tickets. The economy-class cap for the shortest route is Rs 70,000. The lowest of Rs 80,000, Rs 1,10,000 and Rs 70,000 is Rs 70,000. So Rs 70,000 is exempt and Rs 10,000 is taxable. Flying in a higher class does not raise your exemption — the cap is always the economy fare.
How much tax does that save? If you are in the 30% slab, every Rs 48,000 of exempt LTA saves about Rs 14,976 in tax (Rs 48,000 × 31.2%, counting the 4% health and education cess). At the 20% slab, the same exemption saves about Rs 9,984. That is real money left in your pocket for a trip you were taking anyway.
One more point on the cap: if no public transport is available for the place you are travelling to, the cap becomes the AC First Class rail fare for that distance. Keep a note of how you reached the place, because the assessing officer can ask.
Which journeys count? The 2026–2029 block explained
LTA is not an annual benefit. It works on blocks of four calendar years, fixed by the government. You can claim the exemption for two journeys in each block — and the two journeys can even fall in the same calendar year.
| Block | Years | Status |
|---|---|---|
| 2018–2021 | 2018 to 2021 | Closed |
| 2022–2025 | 2022 to 2025 | Closed |
| 2026–2029 | 2026 to 2029 | Current |
The current block runs from 1 January 2026 to 31 December 2029. These are calendar years, not financial years. A trip in December 2026 and a trip in January 2027 are two different calendar years but the same block, so both can count.
The carry-forward rule. If you used only one of your two journeys in a block, you can carry forward one unused journey to the first calendar year of the next block. It must be used in that first year, and then it lapses. So if you used only one journey in the 2022–2025 block, you can claim the second one in 2026 — and 2026 is your only chance. A carried-forward journey does not eat into the two journeys of the new block.
Who counts as family under LTA?
The exemption covers travel for you and your family. Under the rules, “family” means:
- Your spouse.
- Up to two children born after 1 October 1998. Children born before that date are all covered, with no two-child limit.
- Your dependent parents.
- Your dependent brothers and sisters.
The key word is dependent. A parent who lives with you and depends on you for support qualifies. A working adult sibling who earns their own income does not. When you submit your claim, your employer will ask for a declaration of who travelled, so list only the family members who actually made the trip.
Is LTA available in the new tax regime?
No. This is the single biggest reason people lose the exemption. The LTA exemption is available only under the old tax regime. Under the new tax regime — the default since FY 2023-24 — the full LTA component in your salary is taxable, exactly like any other cash allowance.
| Old tax regime | New tax regime | |
|---|---|---|
| LTA exemption | Yes, under Section 10(5) | No |
| What is taxed | Only the part above the exempt fare | The full LTA component |
| HRA exemption | Yes | No |
| Standard deduction | Rs 50,000 | Rs 75,000 |
If your CTC has a large LTA component and you are on the new regime, that whole amount is taxed as salary. Before you switch regimes, add up what you lose — LTA, HRA, and your Section 123 (80C) deductions — and compare it with what you gain from the lower slab rates. For many employees with a big LTA and HRA, the old regime still wins. Our old vs new regime guide walks through that comparison.
What documents do you need to claim LTA?
Your employer will not take your word for it. Keep these ready:
- Original travel tickets — air tickets, train tickets, or bus tickets showing the fare paid.
- Boarding passes for flights, and booking confirmations for trains.
- Payment records — the card statement or bank entry that matches the ticket.
- Your employer’s LTA claim form, filled in with the journey details and a declaration of which family members travelled.
- Proof of the shortest-route fare if your actual route was longer or costlier than the direct route, since the exemption is capped at the shortest-route fare.
Most companies ask you to submit these by January or February, so the exemption shows up in your Form 16. CBDT circulars allow employers to accept a self-declaration for TDS purposes, but that does not mean you can throw the tickets away. The Income Tax Department can ask for proof during scrutiny, so keep every ticket and boarding pass for 6 years after the claim.
What if your employer did not consider your LTA? You can still claim the exemption while filing your ITR, even if your Form 16 shows the full LTA as taxable. Your return will then differ from the salary figure your employer reported, and the department may send a notice asking for the tickets — which is why the 6-year rule matters. Submit the proof, and the claim stands. Our TDS on salary guide explains how the employer-side deduction works, and the Form 12BB guide shows how to declare your deductions to your employer at the start of the year.
Common mistakes that cost you the exemption
- Claiming hotel and food bills. Only the fare is exempt. A hotel invoice, no matter how large, adds nothing to your exemption.
- Claiming a foreign trip. A holiday abroad is not covered. At most, the fare to the Indian airport of departure counts.
- Not keeping the tickets. A self-declaration may satisfy your employer’s payroll team, but the department can still ask for the actual tickets years later.
- Both spouses claiming the same trip. If both of you are salaried, only one of you can claim LTA for a given journey. Claiming it twice is a quick way to get a notice.
- Thinking it is annual. LTA is two journeys per four-year block, not one per year. If you plan your trips, you can use both journeys in the same year — but you cannot carry more than one unused journey forward.
- Being on the new regime and expecting the exemption. If you opted for the new regime, your LTA is fully taxable. Check your regime choice before you book, not after.
- Forgetting the shortest-route cap. A longer, costlier route does not raise your exemption. The cap is the fare for the shortest direct route, whatever you actually paid.
Frequently asked questions
What is LTA exemption and how much is tax-free?
LTA exemption makes the travel fare your employer pays for your leave travel tax-free. The exempt amount is the lowest of your LTA component, the actual fare you paid, or the fare cap for your mode of travel. Only the fare counts; hotel and food costs are taxable.
Is LTA available in the new tax regime?
No. The LTA exemption is available only under the old tax regime. Under the new tax regime, the entire LTA component in your salary is taxed as ordinary salary, with no exemption at all.
Can I claim LTA for foreign travel?
No. LTA covers travel within India only. A foreign holiday gets no exemption, except for the fare up to the Indian airport from which you board your foreign flight. The rest of the foreign fare is fully taxable.
What documents are required to claim LTA?
You need the original travel tickets, boarding passes, and payment records, plus your employer’s LTA claim form and a declaration of who travelled. Keep all of these for 6 years, because the Income Tax Department can ask for proof during scrutiny even years later.
Can both husband and wife claim LTA for the same trip?
No. If both spouses are salaried, only one of them can claim the LTA exemption for a given journey. The other spouse can claim a different journey in the same block, but the same trip cannot be claimed twice.
What happens to unused LTA in a block? Can it be carried forward?
You can carry forward one unused journey to the first calendar year of the next block. If you used only one journey in the 2022–2025 block, you can claim the second one in 2026 — and only in 2026. After that, it lapses.
Are hotel and food expenses covered under LTA?
No. Only the travel fare — air, rail, or bus fare for the shortest route — is exempt. Hotel stays, food, local sightseeing, and taxis at your destination are not covered, no matter how much you spent on them.
Do I need to travel to my hometown to claim LTA?
No. There is no hometown rule. You can claim LTA for a journey to any place in India, whether it is your hometown or a place you have never visited before, as long as the other conditions are met.
Official sources
- Income Tax Department — incometax.gov.in — the e-filing portal and the official text of the Income-tax Act, 2025, including the Section 11 / Schedule III mapping.
- Income Tax Department — incometaxindia.gov.in — the department’s information site, including circulars on TDS and salary taxation.
- Central Board of Indirect Taxes and Customs — cbic.gov.in — for CBIC circulars and notifications.
Reviewed by Asuthod Rathod, CA. Last updated: 5 November 2026. This article is general information, not tax advice. Check the official sources above or speak to a chartered accountant before acting on your own facts.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.