LTA (Leave Travel Allowance) exemption under Section 10(5) lets a salaried employee exclude the actual travel fare for domestic journeys from taxable salary — up to 2 journeys in a block of 4 calendar years, and only under the old tax regime. It covers the fare (air, rail or bus) for the employee and family on the shortest route within India — hotel, food, sightseeing and local conveyance are never covered. Travel from 1 Jan 2026 falls in the new 2026-29 block.
The new tax regime (default from FY 2023-24) disallows LTA along with HRA, and most Section 10 salary exemptions. If your CTC has a meaningful LTA component and you actually travel, that alone can tilt the old-vs-new decision. Compare both before you pick.
Which Travel Fare Is Exempt Under LTA
Only the cost of travel on the shortest / nearest practicable route between origin and destination is exempt, capped by the mode-wise benchmark below (Rule 2B). LTA is limited to the lower of the actual LTA received and the eligible fare.
| Mode of travel | Eligible exempt fare | Condition |
|---|---|---|
| Air travel | Economy class | National-carrier economy fare on the shortest route |
| Rail (place connected by rail) | AC First Class | AC First Class rail fare of the shortest route |
| Road, place not connected by rail (public transport) | Deluxe / 1st class bus | First-class or deluxe fare of recognised public transport |
| Road, place not connected by rail (no public transport) | AC 1st Class rail equiv. | As if the distance were covered by AC First Class rail |
| Private car / taxi | AC 1st Class cap | Capped at the AC First Class rail fare for that route |
Only transport cost is exempt. Hotel, meals, sightseeing, local cabs, visa and travel insurance are never covered.
LTA covers the employee plus spouse, up to 2 children (born after 1 Oct 1998), and dependent parents, brothers and sisters. But the exemption applies only for journeys the employee actually undertakes — if only your family travels and you stay back, that journey is not exempt.
LTA Block Years & Carry-Forward
LTA runs on government-fixed blocks of 4 calendar years — not financial years. You can claim exemption for a maximum of 2 journeys in a block. For FY 2025-26, a journey taken up to 31 December 2025 falls in the 2022-25 block; a journey from 1 January 2026 falls in the new 2026-29 block.
| Block | Period (calendar years) | Journeys | Carry-forward |
|---|---|---|---|
| Previous block | Jan 2018 – Dec 2021 | 2 | 1 unused → next block |
| Just ended | Jan 2022 – Dec 2025 | 2 | 1 unused → usable in 2026 |
| Current block | Jan 2026 – Dec 2029 | 2 (+ any carried-forward) | 1 unused → next block |
| Next block | Jan 2030 – Dec 2033 | 2 | 1 unused → next block |
Blocks are set by the calendar year of travel, independent of your ITR / financial year.
If you used only 1 of your 2 journeys in the 2022-25 block, you may carry over 1 journey — but it must be availed in the first calendar year of the next block, i.e. during 2026. A carried-forward journey used in 2026 does not eat into the 2 journeys otherwise available for the 2026-29 block.
Not sure which block your 2026 trip falls in?
Ask a TaxClue expert →LTA Is Available Only Under the Old Regime
The new tax regime is the default and offers lower slab rates, but it removes LTA, HRA and most salary exemptions. To claim LTA you must opt for the old regime when filing.
Old regime — LTA available
- LTA fare exempt u/s 10(5), 2 journeys / block
- HRA u/s 10(13A) and 80C, 80D etc. allowed
- Standard deduction Rs 50,000 (salaried)
- Best when travel + rent + deductions are high
New regime (default) — no LTA
- LTA and HRA not available
- Most Section 10 salary exemptions removed
- Standard deduction Rs 75,000 (salaried)
- Rebate u/s 87A up to Rs 12L taxable income
- Simpler — best with little travel / few deductions
How the LTA Exemption Is Computed
Exemption = lower of (actual LTA received, eligible fare on the shortest route). Any excess LTA over the eligible fare is added to taxable salary. Here are two typical cases.
Fare < LTA received
Fare > LTA received
The exemption can never exceed the LTA actually paid by the employer, nor the fare actually spent. See our income-tax slabs to value the saving at your slab rate.
LTA is worth claiming if
- You are on the old regime and have an LTA component in CTC
- You travel domestically with family within a block
- You keep tickets, boarding passes and a travel declaration
Reconsider if
- The new regime saves you more overall
- You did not travel (LTA becomes fully taxable)
- Your trip was international or fare exceeds the shortest-route cap
How to Claim LTA Exemption
- Old regime selected before filing
- Original travel tickets (air / rail / bus)
- Boarding passes for the journey
- Travel declaration / Form 12BB to employer
- Proof that the employee travelled
- Shortest-route fare within the eligible cap
- LTA component identified in salary slip / CTC
- Journey counted against the correct 4-year block
LTA is exempt only against actual travel. If you receive LTA but do not travel (or cannot produce proof), the entire LTA is taxable as salary. LTA also does not cover foreign travel or non-fare costs like hotels and food.
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