Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
Section 10(5) of Income Tax Act - Exemption u/s 10(5)
Section 10(5) of the Income Tax Act provides tax exemptions to salaried employees on Leave Travel Allowance (LTA) to ease their financial burden of travel. This exemption applies strictly to domestic travel costs and encourages exploration within India. Specific conditions must be met to avail of this tax benefit to ensure its fair and efficient use.
- 1,616 Views | Updated on: Apr 08, 2025
Tax-saving opportunities in the Income Tax Act are designed to provide financial relief to taxpayers. One such provision, under Section 10(5) of the Income Tax Act, enables salaried employees to claim exemptions on Leave Travel Allowance (LTA). By adhering to the outlined criteria, individuals can reduce their tax liability while enjoying the benefits of domestic travel.
What is Leave Travel Concession (LTC)?
Leave Travel Concession (LTC) is an employer-provided benefit that allows reimbursement of travel expenses incurred during an employee’s leave. It supports employees in undertaking leisure or necessary travel with their families within India. The associated tax exemption for LTC is governed by Section 10(5) of the Income Tax Act, offering additional savings.
Provisions of Section 10(5) of the Income Tax Act
Section 10(5) of the Income Tax Act specifies the rules and limitations for claiming tax exemptions on Leave Travel Allowance. These provisions ensure clarity and consistency in availing tax benefits. Additionally, understanding the Income Tax slabs helps individuals identify the extent of tax benefits they can leverage under different income brackets.
Conditions for Availing the LTA Exemption
The LTA exemption can be an effective way for employees to align their travel goals with tax savings. However, certain conditions should be kept in mind to make the most of this provision.
The travel must be undertaken during a period of leave
The exemption applies only if the journey occurs during an official leave period to align with the employee’s employment terms.
The travel must be within India
Only travel within the geographical boundaries of India qualifies for the exemption to ensure the benefit is restricted to domestic tourism.
The exemption is available for two journeys in a four-year block
Employees can claim the benefit for two journeys undertaken within a designated four-year block, as specified by the government.
The exemption is only for the incurred travel expenses
Tax relief is limited to actual travel costs, such as airfare, rail fare, or other recognized modes of transport. Other expenses, like accommodation or food, are not covered.
The exemption is only for eligible family members
Travel expenses of the employee, spouse, children, and dependent parents or siblings are eligible under the exemption.
Key Factors of Section 10(5) of the Income Tax Act
Think of Section 10(5) of the Income Tax Act as your go-to guide to maximize tax benefits on Leave Travel Allowance. Once you understand its key aspects, you can unlock smarter ways to save while traveling for leisure or necessity within India.
Definition of ‘family’
For the purpose of LTA, family includes the employee’s spouse, up to two children, and dependent parents or siblings.
Block of four years
The exemption is structured around a four-year block system, with the current block spanning from 2022 to 2025. Employees must plan their travel accordingly to avail the benefits.
Recognized modes of travel
Only expenses incurred through recognized modes of transport like air, rail, or approved public transport are eligible for exemption.
Unused LTC
If an employee does not utilize the LTA benefit in a particular block, they can carry it forward to the next block, but only under specific rules.
Tax exemption limits
The amount exempted under Section 10(5) is capped at the actual travel costs incurred. For example, if an employee receives ₹60,000 as LTA but incurs eligible travel expenses of ₹50,000, only ₹50,000 will be exempted under Section 10(5). The remaining ₹10,000 will be taxable as income.
Conclusion
While Section 10(5) of the Income Tax Act offers significant tax-saving opportunities, employees must avoid common mistakes to ensure smooth claims. Missteps like neglecting to retain travel documentation, misinterpreting eligibility criteria, or attempting to claim expenses for ineligible family members can lead to the rejection of claims. Moving forward, individuals should meticulously plan travel, align expenses with LTA rules, and maintain accurate records. Proper awareness and adherence to guidelines can maximize the benefits of this exemption. Furthermore, provisions like Section 10(10D) of the Income Tax Act provide additional clarity on other tax exemptions available.
FAQs on Section 10(5) of Income Tax Act
1
What is section 10(5) of Income Tax Act?
Section 10(5) of the Income Tax Act offers tax exemption on Leave Travel Allowance for expenses incurred on travel within India under certain conditions.
2
Who is eligible for tax exemption under section 10(5)?
Salaried employees who receive LTA as part of their salary package and travel with eligible family members can claim the exemption.
3
What is section 10 exemption in income tax?
Section 10 exemptions include a range of tax relief measures such as those related to House Rent Allowance (HRA), gratuity, agricultural income, and more. A key highlight is Section 10(5) that supports salaried individuals by easing the financial strain of travel, in accordance with certain conditions like the type of journey, eligible family members, and recognized modes of transport.
4
What is the limit of LTA exemption?
The exemption is limited to the actual travel costs incurred and varies based on travel mode and class.
5
Can I claim LTA if it is not part of CTC?
No, LTA must be included in your Cost to Company (CTC) to be eligible for tax exemption.
6
Can I claim LTA without proof?
No, valid proof of travel expenses, such as tickets and receipts, is mandatory for claiming the exemption.
7
What are the documents required to claim LTA exemption?
Documents such as travel tickets, invoices, and receipts are needed to claim the LTA exemption under Section 10(5) of the Income Tax Act.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
- Guaranteed@ Income Benefit for upto 25 years
- Flexibility to choose income period
- Premium break for females on child birth or any listed specific illnesses
- Life cover for the premium payment period
- Enhance your life cover with rider offerings
ARN. No. KLI/23-24/E-BB/1201
Features
- Increasing Life Cover*
- Guaranteed^ Maturity Benefits
- Enhanced Protection Through Riders
- Tax Benefits
- Dual Benefits: Guaranteed^Maturity + Death benefits
Ref. No. KLI/22-23/E-BB/999
Also read
Calculator bookmarks
- ULIP Calculator
- Compound Interest Calculator
- Retirement Calculator
- SIP Calculator
- BMI Calculator
- HRA Calculator
- FD Calculator
- RD Calculator
- Gratuity Calculator
- PPF Calculator
- DASS 21 Calculator
- Term Insurance Calculator
- Human Life Value Calculator
- SWP Calculator
- Investment Calculator
- Pension Calculator
- Annuity Calculator
Term Insurance bookmarks
- Term Insurance
- What is Term Insurance?
- 1 Crore Term Insurance
- Term Plan with Return of Premium
- Claim Settlement Ratio
- 75 Lakh Term Insurance
- 50 Lakh Term Insurance
- 20 Year Term Insurance
- Term Insurance for Smokers
- Zero Cost Term Insurance
- Whole Life Insurance
- Critical Illness Term Insurance
- Term Insurance vs Life Insurance
- Joint Term Insurance
- Term Insurance Benefits
- 1.5 Crore Term Insurance
- Income Replacement Term Plan
Investment Bookmarks
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
Start saving today and enjoy guaranteed returns with our Savings Plans!
popular searches
- SIP Calculator
- Sukanya Samriddhi Yojana
- PPF Calculator
- TDS
- Income Tax Slab
- Term Insurance
- HRA Calculator
- Life Insurance
- Compound Interest Calculator
- Types of Insurance
- 80d Deduction
- BMI Calculator
- Term Insurance Calculator
- ULIP Plans
- What is Term Insurance
- ITR 1
- Income Tax Calculator
- What is ITR
- TDS Refund
- Gratuity Calculator
- Investment Plans
- Pmjjby Certificate Download
- ULIP Calculator
- What Is Tax
- Term Insurance vs Life Insurance
- ULIP Meaning
- Endowment Plan
- Income Tax Deductions
- One Time Investment Plans
- What Is Annuity
- Life Insurance Plans
- Savings Plans
- Short Term Investment Plans
- What is HRA
- 1 Crore Term Insurance
- ULIP Vs Mutual Fund
- Fixed Deposit Calculator
- What is IRDA
- Long Term Investment Plans
- 2 Crore Term Insurance
- Importance of Portfolio Management
- Invest in ULIP
- Term Insurance for Family
- Term Insurance for Housewife
- Benefits of ULIP
- Term Insurance for NRI
- Critical Illness Term Insurance
- ULIP Returns in 10 Years
- 10 Year Investment Plan
- Recurring Deposits Calculator
- Tips to Save Money
- 10 Lakh Investment Plan
- Personal Pension Plan
- Term Insurance for Women
- Insurance Riders
- 25 Lakh Term Insurance
- ULIP Returns in 20 Years
- 5 Year Term Insurance
- ULIP Returns in 15 Years
- 5 Lakh Term Insurance
- DASS 21 Calculator
- 1.5 Crore Term Insurance
- Best Savings Plan for the Middle Class
- Retirement & Pension Plans
- ULIP for Child Education