Submit LTA proofs before March 31, 2025, to avoid risking tax notice when claiming LTA tax exemption in income tax return

old tax regime for FY25 must submit tax-saving proofs to ensure that less tax (due to the tax savings) is deducted from his/her salary and to avoid the hassle of claiming a refund while filing the year's income tax return (ITR).
If eligible, one can claim various tax exemptions and deductions under the old tax regime while filing ITR as well; these include HRA exemption, Section 80C, and other deductions. However, many people are unaware that the exemption claimed for leave travel allowance (LTA) in ITR can face detailed scrutiny/questioning by the income tax authorities if the exemption is not claimed through an employer.

What is the LTA exemption available to salaried employees?

A salaried employee opting for the old tax regime is eligible to claim an exemption for leave travel allowance (LTA) (provided LTA is part of the employee's pay package) subject to certain conditions. An exemption for LTA is available under Section 10(5) of the Income Tax Act.

A salaried employee can claim an exemption for LTA based on the actual expenses incurred on transport (rail, flight tickets etc) while travelling to any place in India. The amount eligible for exemption is contingent upon several factors. These include the amount of LTA to be received from the employer, the amount you have spent, the cost of travel for the shortest distance, etc. Further, this exemption is not applicable in every financial year. LTA exemption cannot be claimed for foreign travel.

ET Wealth online decodes how much exemption you can claim, the