What Is Leave Travel Concession Scheme? | SBI Life

What Is Leave Travel Concession Scheme?

Picture this: You are a central government employee planning a well-deserved break with your family after months of hard work. The Leave Travel Concession (LTC) scheme steps in, making travel much more affordable. This scheme allows employees to claim a concession for travel within India, offering them the chance to visit places without bearing the full cost. Employees can enjoy discounted travel options that significantly reduce the financial burden by availing of the leave travel concession.

What is a Leave Travel Concession (LTC) for Central Government Employees?

The Leave Travel Concession scheme is a facility provided by the Indian government to its employees, helping them travel either to their hometown or any destination within India at a discounted rate. This initiative ensures that employees can refresh and reconnect with their hometowns or explore different parts of the country without worrying too much about travel expenses. The scheme covers travel by air, rail, or road, depending on the eligibility and the level of the employee.

Employees working for the central government can claim this Leave Travel Concession for themselves and their family members, usually once in a block of four years.

What makes the Leave Travel Concession scheme particularly appealing is that it applies to a wide range of employees, including those posted in remote areas.

The scheme encourages travel and relaxation, contributing to overall employee well-being. Furthermore, it supports domestic tourism, ensuring employees can explore India's vast cultural diversity.

Who Is Eligible for LTC?

Eligibility for the Leave Travel Concession scheme is primarily extended to permanent central government employees. In some cases, employees on deputation or contract-based appointments can also benefit. However, the eligibility criteria vary depending on the employment type and the LTC rules.

Government employees who have completed at least one year of continuous service are eligible for LTC. This includes permanent employees and employees on probation. The scheme also extends to employees posted in difficult areas or in public sector undertakings (PSUs), where specific rules apply for claiming the concession.

Employees' family members, including their spouses, children, and dependent parents or siblings, are also eligible under this scheme. The idea is to allow employees to travel with their families without worrying about excessive costs.

Additionally, specific categories of employees, such as those working in the armed forces, paramilitary services, or specific sectors like railways, have their own LTC rules. For them, the Leave Travel Concession may come with additional benefits like free or discounted tickets, depending on their service tenure and other conditions.

Who Is Not Eligible for LTC Benefits?

While the Leave Travel Concession scheme is designed to benefit many government employees, there are specific exclusions.

Employees who have yet to complete one year of continuous service are generally not eligible for LTC. Additionally, temporary employees without confirmation or working under short-term contracts do not qualify for this scheme.

Employees posted abroad or serving in embassies, consulates, or similar international postings do not have the opportunity to claim LTC benefits during their tenure. They may be allowed to claim the concession once they return to India and complete the requisite service period. Furthermore, employees who have already availed of the LTC benefits for the four-year block can only reapply once the new block begins. Employees who have resigned, retired, or been terminated are excluded from LTC eligibility, as they no longer hold a government position.

Certain restrictions apply to employees opting for the concessional tax regime. Under this system, individuals who choose the new tax regime, which has lower tax rates but eliminates many deductions and exemptions, may be unable to claim LTC. This aspect is crucial, as it requires employees to choose between a lower tax rate and the ability to avail of LTC.

Conditions for Claiming LTA

Leave Travel Allowance (LTA), a part of the Leave Travel Concession, comes with several conditions that employees must meet to be able to claim the benefit.

• The travel must be within India, and international travel is not covered under LTC or LTA. Employees must choose a destination either within their home state or any other state within the country. This keeps the scheme focused on domestic tourism and ensures that travel benefits are restricted to India.
• Employees can claim LTC only for travel undertaken during periods of sanctioned leave. Therefore, the Leave Travel Concession scheme does not cover casual trips without approved leave. Additionally, travel expenses must be for journeys taken from the employee's place of duty to the destination, and the return journey must be completed to claim the concession.
• The mode of travel also matters when claiming LTA. Employees must use the modes of transport allowed under the scheme, such as air, rail, or road. The tickets must be booked through authorised travel agents or airlines as prescribed by government rules. Moreover, the travel class is determined by the employee's level within the government service, ensuring a fair and equitable distribution of the benefits across different cadres.

Amount of LTA/LTC Exemption

The amount of Leave Travel Concession exemption depends on the cost of travel and the class of travel chosen by the employee.

For travel within India, the actual fare incurred is eligible for exemption, provided it adheres to the modes of travel allowed under the scheme. Employees travelling by air, for example, can claim an exemption for the economy class fare.

The leave travel concession scheme allows for exemption up to the cost of travel, subject to certain limits based on the travel class. For instance, if an employee travels by train in second class, the exemption will cover the actual fare for the journey in that class. If the employee chooses a higher class, only the fare for the eligible class is exempt, and the employee must bear the additional cost.

The exemption is available for two journeys in a block of four years. This means that employees can claim the leave travel concession twice in one block, and the exemption will apply for both trips. However, if an employee does not claim LTC in a particular block, they can carry over one of the trips to the next block, allowing for greater flexibility in travel planning.

How Often Can One Claim LTA?

The Leave Travel Concession scheme operates on a four-year block system, during which employees can claim the benefit twice.

The scheme is designed in a way that employees are entitled to LTC for two journeys within each block of four years. For example, if the block is from 2020 to 2023, the employee can claim leave travel concession for two separate journeys.

Employees who are unable to claim LTC during a particular block can carry forward one journey to the next block. This feature ensures that employees do not lose out on the benefits if they cannot travel during the designated block period. However, the carried-over journey must be completed within the first year of the new block.

There are certain limits on how often LTC can be claimed for hometown travel versus any destination in India. Employees are usually eligible for one trip to their hometown and one trip to any other destination within the block period. This dual option provides flexibility for employees, allowing them to visit their hometown while also exploring other parts of the country.

Here is an example of how LTC works for a government employee.

An employee entitled to LTC decides to travel with their spouse and two children from Delhi to Kerala during a four-year block period. They are eligible for economy-class airfare reimbursement. Assuming the fare for one person is ₹10,000 (economy class), the total fare for four family members is ₹40,000 one-way. Since the trip is round-trip, the total travel expense becomes ₹80,000.

The government reimburses travel expenses based on the shortest route and the entitled class (economy class in this case). If the government-set eligible fare for this journey is ₹10,000 per person, the employee would get a full reimbursement of ₹80,000 under the LTC scheme. This reimbursement is tax-exempt under Section 10(5) of the Income Tax Act, provided the travel is within India and other conditions are met.

However, if the eligible fare was ₹8,000 per person, the employee would only receive ₹64,000 as reimbursement, and they would have to pay the remaining ₹16,000 out of pocket. The LTC benefit covers two journeys in a four-year block period, promoting domestic tourism for government employees.

Frequently Asked Questions

Conclusion

The Leave Travel Concession scheme offers a valuable benefit for central government employees. It allows them to explore India while easing the financial burden of travel. With the flexibility of hometown and all-India travel options, the scheme promotes relaxation and supports domestic tourism. Employees can make the most of this beneficial initiative by understanding the eligibility and conditions.