Are you planning a vacation for this year? or you have the habit of going for vacation every year to visit the good locations in India. That is indeed a good refreshment to relax from the every day work tension. Before planning for the vacation, lets understand the Leave Travel Allowance (LTA) exemption on your taxable income. I have earlier written about LTA in this blog, this is just a refreshment on the old posts to teach the new readers. If you have any questions, please post it in the comment section.

Leave Travel Allowance (LTA)

Let’s first understand what is LTA?. LTA is allowance given by your company. If you check the tax declaration form, you would have noticed the LTA in it. This allowance is tax exempt if you are using it within the stipulated time. It is not tax free all the time, please read out the following points.

• What is Leave Travel Allowance (LTA)?
• No need to submit proofs for LTA

• This exempt is allowed only twice in the four calendar years.
• Also, these blocks are notified by the income tax department. For example, 2012 fall in the 2010-2013 block. In this period you can use this allowance for two times.
• If you have availed only once in the above duration, you can carry forward to the first year of next block 2014-2017. Also you are eligible for two more times for that block of years.
• If you and your spouse working in a company, both can not claim for the same journey.
• You can claim the expenses incurred on travel to and from the destination, other expenses like food, stay, etc. are not included as part of the exemption.
• The destination must be within India. If you go abroad for the vacation, you are not eligible for the exemption.
• The eligible members to claim the expenses are, spouse, two children, dependent parents, brothers and sisters.
• You have to submit the original proofs to your employer and claim the tax exemption. You are eligible for actual expenses or maximum eligibility LTA, which ever is lower.

Hope the above points gave good idea on the leave travel allowance. LTA’s are introduced by the govt. to encourage the tourism in India. If you have any questions related to this topic, please post it in the comments section. If you want to receive future articles on related topics, please subscribe here. Please refer to our previous article on LTA to get more details.

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The following factors need to be taken into consideration for the computation of total income:

(i) Residential status: This will determine what kinds of income of an assessee are taxable in India. It is important to remember that residential status is different from citizenship, and that it has to be determined separately for every assessment year.

(ii) Heads of Income: There are five heads under which any income of an assessee is classified. They are:
• Income from Salaries
• Income from House Property
• Profits and Gains from Business or Profession
• Capital Gains
• Income from Other Sources
Within each head of income, certain deductions have been given. Income under each head is to be computed separately taking into account the specific provisions.

(iii) Deductions from total income: The Act allows certain deductions on account of certain payments like investments, insurance premia, school fees, etc. (These are loosely referred to as tax saving investments.) These are also to be considered for computing tax payable.

(iv) Apart from the above, it is important to take note of the following points:
• There are certain incomes which are totally exempt from tax. These are contained in section 10.
• An assessee may be assessable for certain other persons’ incomes, e.g minor child, spouse, etc.
• Some losses are eligible for being set off against income in subsequent years. You may take advantage of these provisions.

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