Leave Travel Allowance (LTA): What It Is, How to Claim It in 2026, and What Most People Get Wrong
Neha has been working at a Pune software company for six years. Every December, her HR sends around a reminder to submit LTA claims. Every December, Neha submits her bills — a flight to Goa, tickets for herself and her husband — and gets reimbursement in her salary.
She thinks she’s claiming LTA. What she doesn’t know: she claimed it for Goa in 2022 and again in 2023. She has no more tax-exempt claims left in the 2022–2025 block. The ₹42,000 she got reimbursed in December 2024 is fully taxable. Her HR team never told her. She only found out when the Form 16 arrived.
LTA — Leave Travel Allowance — is one of the most commonly misunderstood components in an Indian salary. It looks simple on paper: travel within India, submit bills, save tax. But the block year system, the family eligibility rules, and the travel-mode limits trip people up every year.
And now, with the 2022–2025 block just ended and the new 2026–2029 block underway, there’s a specific window — this calendar year 2026 — where you may be able to squeeze in one additional carried-forward claim on top of your two new ones.
Here’s everything you need to know.
What this article covers
What LTA is — and Why It’s Worth Understanding
LTA stands for Leave Travel Allowance — sometimes also called Leave Travel Concession (LTC). It’s an allowance your employer pays as part of your CTC specifically to cover travel costs when you go on leave.
The key word there is ‘travel.’ LTA exempts only the cost of getting from point A to point B — airfare, train tickets, bus fare. It does not cover hotels, food, sightseeing, car hire, or anything else you spend on a holiday. Just the transport fares.
Under Section 10(5) of the Income Tax Act, 1961 — which is now restructured under Schedule III of the new Income Tax Act, 2025 (applicable from FY 2026-27) — the LTA received from your employer is exempt from income tax, subject to conditions. The amount you can claim as tax-free is the lower of:
- The actual travel fare you spent, or
- The LTA component your employer has allocated to you in your CTC
So if your CTC has ₹50,000 as LTA per year and you spend ₹38,000 on flights, you claim ₹38,000 as tax-free. The remaining ₹12,000 is fully taxable as salary.
One important point before anything else: LTA exemption is available only under the old tax regime. If you’re on the new tax regime — which is the default since FY 2023-24 — your LTA component is fully taxable. Period. Before planning any LTA claim, confirm your tax regime. Read our old vs new tax regime comparison if you’re not sure.
The Block Year System — This Is Where Most People Get Confused
LTA doesn’t work on an annual basis. It works on a four-year calendar block system defined by the government. You can claim the LTA exemption for a maximum of two journeys within each four-year block.
The blocks run in calendar years (January to December), not financial years (April to March). This is one of the most commonly missed details.
| Block | Period | Maximum Exempt Journeys |
| Previous block | 1 January 2018 – 31 December 2021 | 2 journeys |
| Just-ended block | 1 January 2022 – 31 December 2025 | 2 journeys |
| Current block | 1 January 2026 – 31 December 2029 | 2 journeys |
The 2022–2025 block is now closed. If you used both your claims — great. If you used only one, or zero, there’s a carry-forward rule that may still help you in 2026. More on that below.
In the new 2026–2029 block, you can claim exemption for two journeys at any point across the four years — 2026, 2027, 2028, or 2029. You can take both trips in the same year if you want, or spread them out.
The Carry-Forward Rule — Why 2026 Is a Special Window
If you didn’t use both your LTA claims in the 2022–2025 block, you can carry forward one unused claim into the new block. But there’s a hard condition: the carried-forward claim must be used in the first calendar year of the new block — which means it must be used by 31 December 2026.
After that, it lapses permanently. You cannot carry it forward again.
Here’s what this means in practice:
| What you claimed in 2022–2025 | What you can claim in 2026 |
| Both 2 journeys | 2 journeys (regular for new block) |
| Only 1 journey | 1 carried-forward + 2 regular = up to 3 journeys in 2026 |
| Zero journeys | 1 carried-forward (only 1, not 2) + 2 regular = up to 3 journeys in 2026 |
The critical point: even if you took zero LTA trips in all of 2022–2025, you can only carry forward ONE journey — not both. The carry-forward is capped at one.
So if you have any unclaimed LTA from the previous block, 2026 is potentially your richest year for tax-free travel — with up to three claims if you plan around it. After 2026, only the regular two claims per block remain.
Who Counts as ‘Family’ Under LTA — The Two-Children Rule
The LTA exemption covers travel costs for the employee and their eligible family members. Family is defined under the Explanation to Section 10(5) of the Income Tax Act, 1961 as:
- Spouse
- Children (with an important restriction — see below)
- Parents who are wholly or mainly dependent on the employee
- Brothers and sisters who are wholly or mainly dependent on the employee
The two-children restriction
For children born on or after 1 October 1998, the LTA exemption is available for a maximum of two children. If you have three children all born after this date, only two can be included in your LTA claim.
For children born before 1 October 1998, there is no restriction — all such children are included regardless of how many there are.
There’s also an exception: if you had one child and then had twins (or triplets) in a second pregnancy, those multiple births are not counted against the two-child limit. So you could effectively include three children if the second birth was a multiple.
Note: your parents and siblings are only eligible if they are ‘wholly or mainly dependent’ on you. An independent working sibling or financially self-sufficient parent does not qualify.
What Expenses Qualify — and What Doesn’t
What LTA covers
- Economy class airfare (by the shortest route) if you travel by air
- AC First Class train fare (by the shortest route) if you travel by train
- First class or deluxe bus fare on recognised public transport, if rail is not available
- Where no recognised public transport exists: a mileage rate of ₹30 per kilometre by the shortest route — a rate explicitly restated in Rule 278 of the Income Tax Rules, 2026
What LTA does NOT cover — this list catches most people out
- Hotel or accommodation costs
- Food and restaurant bills
- Sightseeing, amusement parks, museum entries
- Local cab, auto, or taxi rides at the destination
- Toll charges or fuel for a personal car
- International travel — even Nepal, Bhutan, or Sri Lanka. Only India.
- Travel expenses for independent children (above the two-child limit)
- Travel for siblings or parents who are not financially dependent on you
LTA is purely a transport fare reimbursement from your home city to your destination and back. The moment you go beyond that, you’re spending your own money.
Travel Mode Limits: The Caps That Apply
The exemption is calculated based on the mode of transport used — and for each mode, the cap is the fare for the cheapest qualifying class by the shortest route. So even if you travelled business class, the exemption is capped at economy.
| Mode of travel | Exemption cap |
| Air | Economy class fare of the national carrier (Air India) by shortest route |
| Train (even if connected by air) | AC First Class fare by shortest route |
| Road (rail not available, public transport exists) | First class or deluxe bus fare on recognised public transport |
| Road (no rail, no recognised public transport) | ₹30 per kilometre by shortest route |
A few things to note here. ‘Shortest route’ matters — if you took a longer scenic route or a connecting flight via another city when a direct flight was available, the exemption is capped at the direct route fare. And ‘national carrier’ means Air India; if you flew IndiGo or SpiceJet, the exemption is still capped at Air India’s economy fare for that route on that date.
Real Rupee Example: How the Calculation Works
Let’s take Priya, a Bengaluru-based marketing manager. LTA in her CTC: ₹60,000 per year. She’s on the old tax regime. She wants to claim LTA for a family trip to Manali in March 2026.
Travelling: Priya, her husband, and two children (both born in 2002, so they qualify). They fly Bengaluru to Delhi (closest airport to Manali) and take a cab to Manali.
Actual expenses:
- 4 economy class flights (BLR–DEL): ₹12,000 × 4 = ₹48,000
- Cab from Delhi to Manali: ₹8,000
- Return flights (DEL–BLR): ₹10,500 × 4 = ₹42,000
- Hotel in Manali for 5 nights: ₹45,000
- Food and local sightseeing: ₹20,000
| Expense | Amount | Qualifies for LTA? | Reason |
| Outward flights BLR–DEL (4 economy tickets) | ₹48,000 | Yes | Economy class air — qualifies |
| Return flights DEL–BLR (4 economy tickets) | ₹42,000 | Yes | Economy class air — qualifies |
| Cab Delhi to Manali | ₹8,000 | No | No rail, but cab is not recognised public transport |
| Hotel in Manali | ₹45,000 | No | Accommodation — not covered |
| Food and sightseeing | ₹20,000 | No | Not a transport expense |
| Total qualifying travel fare | ₹90,000 | ||
| LTA allocated in CTC (annual) | ₹60,000 | ||
| LTA exemption claimed (lower of the two) | ₹60,000 | Capped at employer’s LTA allocation |
Priya saves ₹60,000 in taxable income. At a 30% tax slab, that’s ₹18,000 in tax saved on a trip she was taking anyway. The hotel and food are out of her pocket, but she already knew that.
The cab to Manali doesn’t qualify because recognised public transport (HRTC buses) exists on that route. If she had taken a Himachal Pradesh state bus, the first class fare on that route would have qualified instead.
What Changes Under the New Income Tax Act, 2025
The Income Tax Act, 2025 replaced the Income Tax Act, 1961 from 1 April 2026. LTA provisions have moved from Section 10(5) to Schedule III of the new Act, with detailed conditions under Rule 278 of the Income Tax Rules, 2026.
In terms of substance, nothing changes. As CA Hita Desai of NPV & Associates LLP noted in a Business Today analysis in February 2026: “The essential framework remains intact — two journeys in a block of four calendar years with the facility to carry forward one unutilised journey to the succeeding year.”
The key operational changes from 2026 onwards:
- Form 12BB is replaced by Form 124 for all investment and travel declarations to your employer
- Rule 278 makes the ₹30/km mileage rate for no-public-transport routes explicitly stated in writing (previously it was part of the rules but less visible)
- Compliance is more formalised — you need to submit actual travel proof, not just declarations
- LTA continues to be available only under the old tax regime — the new regime does not allow this exemption
For your FY 2025-26 ITR (due July 2026), the old Income Tax Act, 1961 framework applies. For FY 2026-27 onwards, the new Act governs — but the practical rules are the same.
How to Claim LTA — Employer First, Then ITR
Step 1: Declaration to your employer
At the start of the financial year, submit your investment and LTA declaration to your employer in Form 124 (Form 12BB for FY 2025-26). Mention the expected LTA claim — this adjusts your monthly TDS so you’re not over-deducted.
Step 2: Actually travel
You must physically take the journey. Claiming LTA without actual travel is fraud. The exemption applies only to journeys actually undertaken — and you need documentary evidence.
Step 3: Submit proof to your employer
After the trip, submit the following to your HR or payroll team:
- Original air tickets or boarding passes (for air travel)
- Train tickets (for rail travel)
- Bus tickets on recognised public transport (for road travel)
- Invoice from the airline, railway, or bus operator
Some employers have a window for submission — typically by December or January. Miss this window and the LTA amount will be added back to taxable income and TDS will be recovered.
Step 4: At ITR filing
When you file your Income Tax Return, the exempt LTA is reflected in your Form 16 under ‘Exemptions under Section 10(5).’ In ITR-1, this shows under the salary schedule. You don’t need to re-enter separately — your employer has already processed it. But keep your travel documents for at least six years in case of a scrutiny notice.
What Most People Get Wrong — The Mistake List
1. Claiming more than two journeys in a block.
Neha’s story at the top of this article. If you’ve already claimed LTA twice in the 2022–2025 block, there’s no third claim in that block. Anything paid out is taxable.
2. Forgetting the block year is calendar year, not financial year.
A journey taken in January 2026 falls in the 2026–2029 block, not the 2022–2025 block — even though it’s FY 2025-26 for tax filing purposes. The two systems run on different clocks.
3. Claiming international travel.
Dubai, Bangkok, Bali, Nepal — none of it qualifies. LTA is for domestic travel within India only. Full stop.
4. Claiming food, hotels, or local transport.
These expenses feel like ‘travel’ but they aren’t what LTA covers. Only the transport fare from your origin city to the destination and back.
5. Flying business class and expecting full reimbursement.
You can fly business class if you like. The LTA exemption is still capped at economy class fare of the national carrier by the shortest route. The premium is yours to bear.
6. Not submitting documents within the employer’s deadline.
LTA declarations without supporting travel proof are rejected by payroll. The missed claim doesn’t disappear — it gets added to taxable salary and you pay tax on it.
7. Claiming LTA while on the new tax regime.
Under the new tax regime, there is zero LTA exemption. If you’ve opted for the new regime, the entire LTA amount in your CTC is taxable. Worth factoring this into your tax regime decision.
8. Including non-dependent parents or siblings.
If your parents are financially independent — they have a pension, rental income, or other income — they may not qualify as ‘wholly or mainly dependent.’ This is a grey area, but it’s one that can come up in scrutiny.
What to Do Right Now
- Check your tax regime. LTA exemption is only available under the old tax regime. If you’re on the new regime, you’re paying full tax on your LTA component already — factor this into your old vs new tax regime calculation.
- Find out how many LTA journeys you claimed in the 2022–2025 block. Check your Form 16 for FY 2021-22, 2022-23, 2023-24, and 2024-25 under Section 10(5). Count the exemptions actually granted.
- If you have an unclaimed journey from 2022–2025, use it before 31 December 2026. This is the carry-forward window. Travel within India, collect your tickets and boarding passes, and submit to HR. This claim is on top of your two regular 2026–2029 claims.
- Submit your LTA declaration in Form 124 to your employer for FY 2026-27. If you plan to travel this financial year, declare it — otherwise your employer will deduct full TDS on your LTA component and you’ll recover it only at ITR filing.
- Plan your two new block claims strategically across 2026–2029. You don’t need to rush. If 2026 already has a carry-forward claim, consider spreading the two regular claims across 2027 and 2028 or 2028 and 2029.
- Keep all travel documents — original tickets, boarding passes, and invoices — until at least six years after the tax year in which you claimed the exemption.
Related Reading on The Salary Investor
- Old vs New Tax Regime India — Which One Should You Pick?
- HRA Exemption Guide for Salaried Indians
- How to Read Your Salary Slip — CTC, TDS, and What Those Deductions Mean
- Section 80C Tax Saving Guide — Where to Invest Your ₹1.5 Lakh
- How to File Your ITR Yourself as a Salaried Employee
Disclaimer: This article is for general educational purposes only and does not constitute legal or tax advice. Information is based on Section 10(5) of the Income Tax Act, 1961 (applicable for FY 2025-26 and prior years), Schedule III read with Rule 278 of the Income Tax Rules, 2026 under the Income Tax Act, 2025 (applicable from FY 2026-27), and the Income Tax Rules, 2026 notified by the CBDT. Block years, carry-forward rules, and travel-mode limits are as per the provisions of the Income Tax Act and Rules as of May 2026. Tax laws are subject to change — verify the latest provisions at the Income Tax Department’s official portal (incometax.gov.in). LTA eligibility, exempt amounts, and family definitions depend on individual circumstances and employer policy. Please consult a qualified Chartered Accountant or SEBI-registered financial advisor before making any tax-related decisions.
Sources: Section 10(5) — Income Tax Department of India (Official Portal) (Income Tax Department, 2026) · Draft Income Tax Rule 278 — Conditions for Schedule III (LTC), TaxGuru (TaxGuru, March 2026) · Leave Travel Concession Rules — How Draft Income Tax Rules Calculate LTA from 2026, Business Today (Business Today, February 2026) · Income Tax Rules 2026 — Big Changes from 1 April Every Taxpayer Must Know, TaxGuru (TaxGuru, April 2026) · Leave Travel Allowance — Exemption Limit, Rules, How to Claim, ClearTax (ClearTax, May 2026) · LTA Block Years and Current 2026–2029 Block, Omnivoo (Omnivoo, 2026) · Leave Travel Allowance — Exemption Rules and Claim Guide, Tax2Win (Tax2Win, March 2026) · New Tax Regime Provisions under Income Tax Act 2025, TaxGuru (TaxGuru, March 2026) · New Income Tax Act 2025 — A Complete Guide, Zoho Payroll India (Zoho Payroll India, April 2026)
He figured out most of what he knows about personal finance not from courses or advisors, but from years of reading, making mistakes, and fixing them. The Salary Investor is his attempt to save other salaried Indians the same time and money.
He is not a CA or a SEBI-registered advisor. He writes as a fellow salaried person who has been in the trenches — navigating EPF, ITR, 80C, salary slips, and market volatility.