The term LTA stands for Leave Travel Allowance. It is the exemption received by the employee from his employer for travelling on leave. Hence, salaried individuals can only claim this exemption. But due to pandemic the employees are unable to travel which results in failure to claim Leave Travel Allowance (LTA). Accordingly, to let such employees claim LTA exemption and to boost the GST collection, Government announced a scheme where employees can claim exemption without travelling.
Conditions to claim Leave Travel Allowance (LTA)
Due to announcement of new scheme, the employees can claim exemption even without travelling in the F.Y. 2020-21. But to avail this exemption employees should made expenditure on the purchase of goods and services which attracts GST.
The following conditions must be satisfied to claim exemption for Leave Travel Allowance;
- The three times the amount of LTA earned need to be spent.
- Goods and Services to be purchased from registered GST dealer.
- Payments to be made only via digital mode.
- All Invoices of the purchase has to be submitted to the employer.
- Availing for this scheme shall count as usage of 1 trip (out of 2) allowed in the block of 4 calendar years 2018-21
- ‘specified expenditure’ should have been incurred by a taxpayer or a member of his family.
- This ‘specified expenditure’ means expenditure should have been made on purchase of goods or services that attract a GST rate of 12% or more.
- In case you don’t avail of the scheme most employers either allow you to carry forward the amount to next year or pay it to you after deducting TDS on it.
Limitations under LTA scheme
With every benefit few restrictions arrived same in this scheme. Under new scheme of LTA, following are the restrictions about which you should be aware of;
Note : For claiming exemption in current year, expenditure needs to be done before 31/03/2021 as the current pre-defined 4 year block is 2018-2021. In case, the amount remains unclaimed it can be utilized during 1st journey of next block.
Where to spend LTA money to claim exemption?
Following is the list of items with GST rate of 12% or more which you can consider to spend your money to claim LTA without travelling;
|Goods and services with rate of 12% or more|
|Mobile Phones and Laptops||18%|
|Air Conditioners and Refrigerators||28%|
|Interior Decorator Services||18%|