Reimbursement of expenses incurred by employee and his family for travelling while on leave are exempt up to stipulated limits. Accordingly--
Many employers grant the facility to the employees and their families of travelling to their home town or any other place in India in a block of two or four years. This perquisite on account of Leave Travel Concession if actually availed by the employee is exempt from Income Tax subject to the limits of expenses prescribed. However, in case the Leave Travel Concession is encashed by the employee without performing the actual journey the entire amount received by the employee would be taxable in the relevant previous year.
LTC given to an employee and his family in connection with his proceeding to any place in India after retirement from service or after the termination of his service is exempt subject to conditions laid down as in the case of Central Government employees.
Where the journy is by air, an amount not exceeding the air economy fair of the national carrier by the shortest route to the place of destination.
Where the origin of journy and destination or part thereof are not connected by rail, the exemption shall not exceed
Where a recognised public transport system exists, the first class or deluxe class fare by the shortest route, and
Where such system does not exist, air-conditioned first class rail fare applicable to the distance.
