by Mr.T E Gautham,
CEO, Hinote Systems, Chennai
If an employee travels by air
from one place to another and gets back, the exemption shall be the actual air
fare expenses incurred by the employee or the economy air fare in an Air India
flight for the same places, whichever is lesser.
Illustration
An employee travels by air
from Chennai to Mumbai (and back) by business class and incurs Rs. 50,000
towards air ticket fare. The return economy air fare from Chennai to Mumbai
costs Rs. 13,000 by Air India flight. The company reimburses Rs. 50,000 towards
LTA.
 |
| Mr.T E Gautham |
What is the tax exemption
available to the employee?
Answer: Since the economy air fare is lesser than the
actual fare expense incurred by the employee, the tax exemption shall be
limited to Rs. 13,000. The LTA amount to the extent of Rs 37,000 will be
taxable.
If an employee (and his
family) travels by train or / any other mode (other than air) from one place to another and back (the
places are connected by train), the exemption shall be the actual train fare /
or ticket / or travel expenses incurred by the employee or the First A / C
train fare (if the employee had made the trip by train), whichever is lesser.
Illustration
An employee travels from
Chennai to Hyderabad by taxi and incurs Rs. 30,000 towards taxi fare. The First
A / C train fare for Chennai to Hyderabad costs Rs. 2,000. The company
reimburses Rs. 30,000 towards LTA.
What is the tax exemption
available to the employee?
Answer: Since the First A / C
fare is lesser than the actual fare expense incurred by the employee, the tax
exemption shall be limited to Rs. 2,000. The LTA amount to the extent of Rs.
28,000 will be taxable.
Illustration
An employee and his family
travel by train from Chennai to Hyderabad by second A / C and incur Rs. 13,000
towards train fare. The First A / C train fare for Chennai to Hyderabad for the
employee and his family costs Rs. 16,000.
What is the tax exemption available
to the employee?
Answer: Since actual fare
expense incurred by the employee is less than the First A / C fare, the tax
exemption shall be limited to Rs. 13,000.
Illustration
An employee and his/her
family travel by taxi from Place A to Place B which are not connected by train
and incur Rs. 6,500 towards taxi fare.
How should the tax exemption
be calculated?
Answer:
1. If there is public
transport facility (say, bus) available for travel between Place A and Place B:
The tax exemption amount shall
be Rs. 6,500 or / the first class / or
deluxe fare by way of the public transport, whichever is lesser.
2. If there is no public transport facility
available for travel between Place A and Place B:
The tax exemption amount
shall be Rs. 6,500 or the First A / C
train fare for travel between 2 other places of the same distance as from Place
A to Place B.
About Hinote
Systems..
Hinote offers payroll
services and software to organizations in India. We currently manage payroll
for thousands of employees across customer organizations all over India.
Our customer organizations
are from sectors such as manufacturing and services including Information
Technology (IT), Business Process Outsourcing and the social sector. We have
significant expertise in payroll and information technology.
Hinote Systems provides
services, Software Related to Payroll / HR
Email: info@hinote.in, gautham@hinote.in
Web Site: www.hinote.in/blog
1, Venkatarathinam Nagar
Extn,
Second Street, Adyar,
Chennai- 600 020
phone: +9144 4330 7244
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