Leave Travel Allowance Exemption Rules: Who Can Claim LTA in ITR Filing for FY26?

As the July 31, 2026, income tax return filing deadline approaches, many salaried taxpayers are reviewing deductions and exemptions available through their salary structure. One such benefit is Leave Travel Allowance (LTA), which provides tax relief on eligible travel expenses incurred during leave.

The exemption is governed by specific provisions under the Income Tax Act and Income Tax Rules. Taxpayers should understand the applicable conditions before claiming the benefit while filing their returns.

What Is Leave Travel Allowance and How Does It Work?

Leave Travel Allowance, also known as Leave Travel Concession, is an allowance provided by employers to cover travel expenses incurred by employees during periods of leave. The exemption is available under Section 10(5) of the Income Tax Act, read with Rule 2B of the Income Tax Rules.

To claim the benefit, the employee must receive LTA as part of the salary package and undertake the journey while on leave. Employees whose compensation structure does not include an LTA component are generally not eligible for the exemption.

Who Can Claim LTA Exemption Under the Old Tax Regime?

LTA exemption is available only to taxpayers who opt for the old tax regime while filing their income tax returns. Individuals choosing the new tax regime cannot claim this exemption, regardless of whether it appears in their salary structure.

The benefit is intended specifically for salaried employees who satisfy the prescribed conditions under tax laws. Taxpayers should verify the regime selected before considering an LTA claim in their return.

LTA Exemption Eligible Travel Expenses in India

The exemption covers only the actual cost of travel undertaken within India. Depending on the mode of transport used, eligible expenses may include air fare, rail fare, or public transport fare, subject to limits prescribed under the rules.

The tax benefit applies solely to the travel component and is not linked to the overall cost of a holiday. The exemption amount is restricted to qualifying travel expenses that meet the conditions laid down by the Income Tax Rules.

Expenses Not Covered Under Leave Travel Allowance

Several vacation-related expenses remain outside the scope of the LTA exemption. Costs relating to hotel stays, meals, sightseeing activities, shopping, and other incidental expenditures do not qualify for tax relief under this provision.

Similarly, international travel is not eligible, as the exemption is available only for journeys undertaken within India. Taxpayers should carefully distinguish between travel costs and other holiday expenses while calculating the exemption amount.

Read More: Income Tax Act 2025 Transition Rules Clarified by CBDT for Pending Proceedings.

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Conclusion

The Income Tax Rules permit employees to claim LTA exemption for 2 journeys within a block of 4 calendar years notified by the government. If only 1 journey is claimed during a block, the unutilised benefit may generally be carried forward for use on the first journey of the next block, subject to applicable conditions.

The exemption may also extend to eligible family members, provided the prescribed requirements and family definitions are satisfied. Understanding these rules can help salaried taxpayers accurately assess their eligibility before filing their income tax returns for FY26.

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