Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: cpt :: empanelment :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: ARTICLES ON INPUT TAX CREDIT IN VAT :: due date for vat payment :: VAT Audit :: form 3cd
 
 
General »
 How tax related, PAN grievances can be resolved through E-Nivaran
 Tackling income tax exemptions for equities and agriculture
 Amfi wants tax benefits for retirement plans
 Top five factors which could chart market direction in the coming week
 Tax rate hikes boost shadow economy
 Tax mop-up may decline in new amnesty scheme
 Weeks before Budget, Finance Minister Arun Jaitley lists out benefit of low tax rates
 Second home loan tax benefits
 Alarm bells over return of tax inspector raj
 Shah gets notices over civic tax dues
 Tax revenue down in first six months after prohibition

LTA to be tax exempt only for domestic travel
May, 15th 2013

Tax exemption on leave travel allowance or LTA can be claimed only on domestic travel and cannot be clubbed with an overseas journey. If an air ticket comprises Indian and overseas components, no exemption will be provided either on the entire cost or on partial Indian travel.

This was clarified in a recent ruling by the Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) while hearing an appeal of a PSU bank employee. The employee, Om Prakash Gupta, had argued that since the final destination was India, the entire airfare claimed by him should be tax exempt. His travel included visits to Singapore and Malaysia.

Gupta further appealed that if not the entire amount, at least the cost incurred on the Indian leg of the journey should be considered for tax exemption. But the ITAT bench denied his appeal. "Section 10 (5) of the Income Tax Act and Rule 2B do not stipulate that journey to any place in India would be made via a place outside India.

The intention of the legislature was certainly not to grant exemption for reimbursement of the value of the LTA where the journey was performed via a foreign country," the bench observed, ruling out any exemption.

The LTA exemption is available for travel expenses (comprising air, road or rail fare) by the employee and his family for two journeys performed in a block of four calendar years, subject to fulfilling various conditions. The current block of four years expires in December this year.

Under the tax laws, even for domestic travel, where the journey is performed in a circular form touching different places, the exemption is limited to the travel expenses that would be admissible from the place of origin to the farthest point reached in India, by the shortest route.

The Central Board of Direct Taxes in its October 5, 2012 circular relating to TDS from salary income for 2012-13, had made LTA claim processing norms stringent. It was made mandatory for employers to satisfy themselves that the LTA claimed was treated as tax exempt in accordance with the laws. Further, employers were required to collect and preserve supporting evidence of LTA claims made by employees.

These strict processing norms are likely to continue for current financial year. "As the Chandigarh ITAT has clarified that even the India portion of the airfare is not eligible for tax exemption, due care must be taken while computing TDS against employees' salaries," claims a vice-president (payroll) of an IT company.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Work Flow Workflow Software Software Automation Workflow automation Software Design Workflow Design Business Work Flow Workflow automation tools

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions