Income Tax : LEAVE TRAVEL CONCESSION..!

Introduction 

            If an employee goes on travel (on leave) with his family and traveling cost is reimbursed by the employer, then such reimbursement is fully exempted under the section 10(5).

1. Journey may be performed during service or after retirement.
2. Employer may be present or former.
3. Journey must be performed to any place within India.
4. In case, journey was performed to various places together, then exemption is limited to the extent of cost of Journey from the place of origin to the farthest point reached, by the shortest route.
5. Employee may or may not be a citizen of India.  
6. Stay cost is not exempt. 

Exemption: Exemption is limited to the amount actually incurred on the travel to the extent as under:

Journey performed	Maximum exempted fare
By Air	Air economic class fare of shortest route
By Rail	Air-conditioned 1st class fare of shortest route
When the place of origin and destination is connected by rail but journey is performed by any other mode of transport	Same as above.
Where a recognized public transport system exists	First class or deluxe class fare, as the case may be, on such transport.
Where no recognized public transport system exists	Amount equivalent to air-conditioned 1st class rail fare, for the distance of the journey by the shortest route, as if journey had been performed by rail.

a) No exemption can be claimed without performing journey and incurring expenses thereon.

b) Block-period: Exemption is available in respect of 2 journeys performed in a block of 4 calendar years commencing from 1st January 1986. Academically, for the A.Y. 2021-22, the relevant block is Jan 2018 to Dec. 2021.

c)Carry-forward facility: Where concession is not availed during the preceding block (whether on one occasion or both, then any one journey performed in the first calendar year of  the immediately succeeding block will be additionally exempted (i.e. not counted in two journey limit)

d) Family: Family here means -

•   Spouse and children of the individual; and

• Parents, brothers and sisters of the individual, who are wholly or mainly dependent on him.

e)Restriction on number of children: Exemption can be claimed for any number of children born on or before 30/9/1998. In addition, exemption is available only for 2 surviving children born on or after 1/10/1998.  However, children born out of multiple birth, after the first child, will be treated as one child only.                    

f)Fixed Leave travel allowance: Fixed amount paid to employees by way of leave travel allowance shall not be exempt. 

 The exemption u/s 10(5) is for travel cost and does not include stay cost or other cost.