What is Leave Travel Concession?
Leave Travel Concession is an exemption for assistance/ allowance received by the employee from his employer for travelling on leave, related provision is stated in the section 10(5) of the Income Tax Act 1961. Value of travel assistance or concession received by or due to the individual from his employer or former employer for his family or himself, in connection with his proceeding:
- on leave to any place in India;
- to any place in India after retirement from service or after the termination of his service,
Who is eligible for Leave Travel Concession?
According to the section 10(5) of the Income Tax Act 1961, The Leave Travel Concession tax exemption claim can be made for domestic travel of self or family members. Meaning of family includes your spouse, children, & parents who are dependent & siblings. Leave Travel Concession tax break is not available for more than two children. both the Husband & Wife (spouses) can claim the exemption on Leave Travel Concession from their employers.
What happened on balance of unutilized Leave Travel Concession?
If the unutilized Leave Travel Concession is not claimed within the 1st year of the next block, Leave Travel Concession will be expire & would not be permissible to be claimed later on,
Honorable SC: Leave Travel Concession is only allowed for travel within in India
State Bank India Vs. Assistant Commissioner of Income-tax - Supreme Court Order dated 04 Nov 04 2022
- Leave Travel Concession is not for a Foreign Travel. Travel shall be done from 1 designated place in India to other designated place within India.
- In the present case, Employees of SBI had undertaken travel to Malaysia or Rameswaram via Mauritius, Andaman Nicobar via Malaysia, Singapore or Andaman Nicobar via Bangkok, Madurai via Dubai or Thailand and Port Blair.
- A foreign travel frustrates the basic purpose of Leave Travel Concession. The basic objective of the Leave Travel Concession scheme was to familiarize a civil servant or a govt employee to gain some perspective of Indian culture by traveling in this vast India.
- Honorable Supreme Court Held: For the above reasons, the Assessing Officer, Commissioner of Income-tax (Appeal), Hon`ble Delhi High Court, all have rightly held that SBI (Assessee-Employer) as an Assessee in Default for not deducting Tax Deducted at Sources on reimbursement of Leave Travel Concession to its employees
- According to a bench consisting of Chief Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, & Justice Sudhanshu Dhulia. Say that income tax law mandates that the airfare between the two points, which must be within India, will be provided, and the Leave Travel Concession which will be provided will be of the shortest route between these two places, It applies to travel only within the India.
- Leave Travel Concession is for travel within India via shortest route from one place in India to another place in India...the moment employees go travel with a foreign leg, it is not a travel within India & So not covered under the provisions of Section 10(5) of the Income Tax Act 1961