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In summary
The exemption commonly known as Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) covers eligible travel within India when the statutory conditions are met. Under the current rules, you can claim eligible travel for two journeys in a four-calendar-year block. The current block runs from 2026 to 2029. Actual travel cost and prescribed fare limits determine the exempt amount. Keep these points in mind:
- Exemption covers eligible travel within India
- Two journeys qualify in each block
- Current four-year block runs from 2026-2029
- Actual eligible travel cost caps exemption
- Food and hotel costs remain excluded
- New tax regime excludes LTA exemption
The exemption is not available when income is computed under the new tax regime in section 202(1). You must also satisfy the applicable travel, family, and fare conditions.
What does Section 10(5) mean under current law?
Section 10(5) is the old provision that exempted eligible travel concession or assistance received from an employer or former employer.
For tax years beginning from 1 April 2026, the Income-tax Act, 2025 applies. The Income Tax Department's official provision mapping places the old Section 10(5) exemption under section 11, Schedule III, Table Sl. No. 8.
The current provision covers travel concession or assistance received by an individual:
- From an employer for eligible leave travel
- From an employer or former employer after retirement
- After termination of employment, where applicable
- For the individual and eligible family members
The journey must be to a place in India. The exemption cannot exceed the amount actually spent on eligible travel.
Can you claim LTA under the new tax regime?
No. The LTA exemption is not available when your income is computed under the new tax regime in section 202(1). Section 202(2) of the Income-tax Act, 2025 specifically requires income under the new regime to be calculated without the exemption in Schedule III, Table Sl. No. 8. This means you need to opt out of the section 202(1) new tax regime and satisfy the other conditions before the LTA exemption can apply. The exemption should therefore not be treated as automatically available simply because your employer includes LTA in your salary package.
Which travel expenses qualify for LTA exemption?
The exemption covers eligible travel costs for journeys within India, subject to Rule 278 of the Income-tax Rules, 2026. The amount cannot exceed the actual travel expenditure or the applicable prescribed fare limit.
| Mode or travel situation | Maximum amount considered |
| Air travel | Fare for entitled class by shortest route |
| Rail-connected route, non-air travel | AC first-class rail fare by shortest route |
| No rail, public transport available | First-class or deluxe fare by shortest route |
| No rail or recognised public transport rate | Rs. 30 per kilometre by shortest route |
These limits come from Rule 278, notified under the Income-tax Rules, 2026. The exemption relates to the eligible journey itself. Hotel stays, meals, sightseeing, shopping, and other holiday expenses are not part of the travel-fare exemption.
How often can you claim the LTA exemption?
You can claim the LTA exemption for up to two eligible journeys during each block of four calendar years. Under Rule 278, the current four-year block runs from 2026 to 2029. The limit applies to the number of eligible journeys claimed during the block, not to individual tax years. Therefore, receiving an LTA component every year does not allow you to claim the exemption for an unlimited number of trips.
Carry-forward rule for an unused LTA journey
If you do not use an eligible LTA journey during a four-year block, you can carry forward one unused journey to the next block, subject to the prescribed conditions. The carried-forward journey must be used in the first calendar year of the new block. It is counted separately and does not reduce the two journeys available for the new four-year block.
For example, if you had one eligible journey left unused from the 2022–2025 block, you can use the carry-forward benefit in 2026. You can still claim up to two additional eligible journeys during the 2026–2029 block, provided all other LTA conditions are met.
Which family members can be covered?
The law defines family for this exemption rather than allowing travel costs for every relative. Family includes:
- Spouse
- Children
- Parents who are wholly or mainly dependent
- Brothers who are wholly or mainly dependent
- Sisters who are wholly or mainly dependent
The Income-tax Act, 2025 carries this definition in the notes to Schedule III.
Rule 278 also restricts the exemption to a maximum of two surviving children. This restriction does not apply to children born before 1 October 1998. It also contains an exception for specified multiple births after one child. You should therefore check the family conditions before including another person's travel fare in your exemption claim.
How is the exempt LTA amount calculated?
The exempt amount is limited by both the actual eligible expenditure and the prescribed travel-fare limit.
Consider an illustrative example.
Neha receives Rs. 60,000 as LTA from her employer. She travels from Mumbai to Jaipur with her spouse and incurs Rs. 35,000 of eligible travel fare. Assume the entire Rs. 35,000 falls within the applicable Rule 278 fare limit and all other conditions are met.
Eligible exemption = Lower of actual eligible travel cost and applicable fare limit
If the eligible amount is Rs. 35,000:
LTA received = Rs. 60,000
Exempt amount = Rs. 35,000
Remaining amount = Rs. 25,000
The Rs. 25,000 balance does not become exempt merely because it formed part of the employer's LTA payment. This example also assumes Neha is eligible to claim the exemption under her chosen tax regime.
What expenses are not covered by LTA?
LTA exemption does not cover the full cost of your holiday. Expenses outside the eligible travel fare include:
- Hotel and accommodation costs
- Food and restaurant expenses
- Sightseeing expenses
- Shopping expenses
- Local leisure expenses
- International travel expenses
The exemption is linked to eligible travel within India and is capped according to Rule 278. For example, if you spend Rs. 25,000 on eligible travel and Rs. 30,000 on accommodation, the hotel cost does not increase the amount available for LTA exemption.
What should you check before claiming LTA?
Before claiming LTA, check whether the journey satisfies every applicable condition rather than looking only at the amount received from your employer. Review the following:
- Whether you are eligible under your tax regime
- Whether the journey is within India
- Whether the journey falls within the block limit
- Whether family members meet the definition
- Whether child-related restrictions apply
- Whether actual travel expenses are documented
- Whether the prescribed fare cap is satisfied
Keep tickets, invoices, boarding passes, or other travel evidence requested by your employer. The exact documentation process can depend on your employer's payroll requirements, but the exemption itself remains subject to the tax-law conditions.
Conclusion
Section 10(5) of the Income-tax Act, 1961 covered the Leave Travel Allowance exemption. From 1 April 2026, the corresponding provision is section 11 read with Schedule III, Table Sl. No. 8 of the Income-tax Act, 2025. The exemption applies to eligible domestic travel and is subject to actual travel expenses, prescribed fare limits, family conditions, and the two-journey limit within each four-year block. It is not available under the new tax regime specified in section 202(1).
Last reviewed: October, 2026
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Frequently Asked Questions
Eligibility and travel conditions
Expenses covered under LTA
Claim frequency and LTA blocks
Who is eligible for the tax exemption under section 10(5)?
The exemption is available to eligible employees who receive Leave Travel Allowance (LTA) or Leave Travel Concession (LTC) from their employer and meet the prescribed conditions. The journey must be within India, and the exemption is limited to eligible travel costs. Under the current law from 1 April 2026, the corresponding exemption is covered under section 11 read with Schedule III of the Income-tax Act, 2025.
What expenses are covered under the LTA exemption?
The exemption covers eligible travel fare for journeys within India, subject to the applicable fare limits. Depending on the mode and route, this can include eligible air, rail, or public transport fare. Expenses such as hotel accommodation, meals, shopping, sightseeing, and entertainment are not covered. The exemption is also limited to the actual eligible amount spent on travel.
How often can one claim an LTA exemption?
You can claim the LTA exemption for up to two eligible journeys during a block of four calendar years. The restriction applies to journeys, not to the number of years in which you receive LTA from your employer. One unused eligible journey can also be carried forward to the first calendar year of the next block, subject to the prescribed conditions.
What are the current blocks for claiming the LTA exemption?
The current LTA block runs from 2026 to 2029. The previous block was 2022 to 2025. You can claim exemption for up to two eligible journeys during the current four-year block. If one eligible journey from the previous block remained unused, it can be carried forward and used in 2026, subject to the applicable carry-forward conditions.
Is LTA exemption available for the travel expenses of family members?
Yes. Eligible travel expenses of specified family members can be covered. Family generally includes your spouse and children, along with parents, brothers, and sisters who are wholly or mainly dependent on you. The rules also contain restrictions relating to the number of eligible children in certain cases. The journey must still meet the domestic travel and other prescribed LTA conditions.
What tax exemption is available under Section 10(5) of the Income Tax Act for leave travel allowance?
The exemption applies to eligible travel concession or assistance received from an employer for travel within India. The exempt amount is limited to the lower of the actual eligible travel expense and the prescribed fare limit. The benefit is subject to journey limits, family conditions, and other rules. From 1 April 2026, the equivalent provision is covered under section 11 and Schedule III of the Income-tax Act, 2025.
What are the eligibility and travel conditions for claiming Section 10(5) LTA exemption?
To claim the exemption, you must undertake an eligible journey within India and incur the travel expense. The claim must fall within the permitted four-year block and prescribed journey limit. Eligible family members can also be included. The exempt amount is restricted to the actual eligible travel cost and the fare limits prescribed under the applicable rules. The exemption is not available under the new tax regime.
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