What Is Section 10(5) of the Income Tax Act?

Section 10(5) of the Income Tax Act discusses the conditions to avail of the LTA exemption. LTA or LTC is an allowance paid by employers to help employees meet the cost of travel during periods of leave.

Who is eligible for the tax exemption under section 10(5)?

The employee who receives the leave travel allowance from the employer as a part of their salary can claim the tax exemption under section 10(5), provided all the other associated conditions are satisfied.

What expenses are covered under the LTA exemption?

Any expense directly incurred for travel on eligible journeys can be claimed as an exemption under section 10(5). The exemption is limited to the actual LTA received.

Can the LTA exemption be claimed for international travel?

No, LTA exemption under section 10(5) of the Income Tax Act is only available for domestic travel, i.e. journeys within India. International travel is outside the scope of this section.

How often can one claim an LTA exemption?

Employees can claim the LTA exemption on two eligible journeys in a block of four years. The current four-year block is from 2022 to 2025.

What are the current blocks for claiming the LTA exemption?

The current block of four years for LTA exemption, as notified by the government, is from 2022 to 2025. The next block is from 2026 to 2029.

Can the LTA exemption be carried forward if not claimed?

Yes, as per section 10(5), any unclaimed LTA exemption can be carried forward to the next block of four years. However, it must be claimed within the first year in the new four-year block.

What documents are required to claim the LTA exemption?

To be eligible for the benefits under section 10(5), employees must provide documents like proof of the journey and proof of the expenses incurred. These may include travel tickets, boarding passes or any other papers that serve as evidence.

Is LTA exemption available for the travel expenses of family members?

Yes, any travel undertaken by immediate family members of the employee — like their children, spouse and dependent siblings or parents — qualifies for the LTA exemption under section 10(5).

How is the LTA amount calculated for exemption purposes?

The amount actually paid for travel expenses incurred on eligible journeys is eligible for exemption under section 10(5) — limited to the LTA received by the employee.

What is travel concession under section 10 5?

The amount exempt under Section 10(5) is limited to the actual travel expenses incurred. For example, if an employee receives Rs. 60,000 as LTA but spends Rs. 50,000 on eligible travel, only Rs. 50,000 is exempt. The balance Rs. 10,000 becomes taxable income.

How can I claim the tax exemption under Section 10(5)?

To claim the tax exemption under Section 10(5), you must receive Leave Travel Allowance (LTA) from your employer and undertake eligible travel within India. Keep travel tickets and other supporting documents as proof, and submit them to your employer or claim the exemption while filing your income tax return, if eligible. The exemption applies only to actual travel expenses and is available only if you meet the prescribed conditions.

Is Leave Travel Allowance (LTA) exempt under Section 10(5)?

Yes, Leave Travel Allowance (LTA) is exempt under Section 10(5) of the Income Tax Act, subject to certain conditions. The exemption applies only to the cost of travel for you and your eligible family members when travelling within India. It does not cover expenses such as hotel stays, food, shopping, or local transport. You can claim the exemption for two journeys in a block of four calendar years, provided you meet the prescribed conditions.

Section 10(5) of the Income Tax Act

What is section 10(5) of income tax act

Section 10(5) of the Income Tax Act, 1961, provides tax exemption for Leave Travel Concession (LTC) received by employees. The exemption covers travel expenses for employees and their families during leave, subject to specified conditions, such as travel within India, eligible modes of transport, and limits on the frequency of claims (twice in a block of four calendar years).

3 min

14-July-2026

Section 10(5) of the Income Tax Act, commonly referred to as the Leave Travel Allowance (LTA) exemption, allows eligible individual taxpayers to claim tax benefits on certain travel expenses. Under Section 10(5), the exemption is available only for domestic travel undertaken within India. It covers eligible travel costs such as airfare, rail fare, or bus fare incurred by an employee and their eligible family members, subject to the prescribed conditions. Expenses such as accommodation, food, local transport, or sightseeing are not covered under this exemption. Section 10(5) of the Income Tax Act lays down the rules and conditions that employees must satisfy to claim tax exemption on the Leave Travel Concession (LTC) or Leave Travel Allowance (LTA) received as part of their salary package. Understanding the provisions of Section 10(5) can help salaried individuals claim the correct tax benefit while remaining compliant with the Income Tax Act. In this article, we explain the key provisions, eligibility criteria, and important conditions in detail.

What is Leave Travel Concession (LTC)?

Leave Travel Concession, also commonly known as Leave Travel Allowance (LTA), is a type of allowance included in an employee’s salary. The employer offers this allowance to help employees meet the cost of travel undertaken during periods of leave. Some employers may offer this allowance as a reimbursement instead. The LTA is typically included in the employee’s cost-to-company (CTC).

What is Section 10(5) of Income Tax Act?

Section 10 of the Income Tax Act grants exemptions for certain incomes if specified conditions are met. These exempt incomes are not included in total income for tax calculation, though they must be disclosed in the ITR. Some exemptions are available only under the old tax regime introduced before 2020.

Popular exemptions under Section 10 include House Rent Allowance (HRA), Leave Travel Allowance (LTA), interest earned on provident fund contributions, withdrawals from the National Pension Scheme (NPS), and amounts received on superannuation, such as gratuity and leave encashment.

Provisions of section 10(5) of the Income Tax Act

Since LTA forms a part of the employee’s salary, it is considered to be a taxable income. However, section 10(5) of the Income Tax Act lays out certain conditions for claiming LTA exemption. If an employee meets the conditions specified in this section, they can deduct the eligible amount of LTA, thus reducing the total taxable income and the tax liability thereon.

The provisions of section 10(5) include the conditions that need to be fulfilled by an employee to make them eligible for LTA exemption. The conditions define the types of travel that are considered eligible, the geographical boundaries for such travel, the number of trips considered and the expenses eligible for deduction.

Also read: Direct Tax Code 2025

Section 10(5) of Income Tax Act: Eligibility

The exemption is only available for actual travel.
Only trips inside India, known as domestic travel, are eligible for exemption. LTA does not cover trips outside of the country.
To qualify for the travel exemption, either the employee or his immediate family (spouse, children, and fully or mostly dependent parents, siblings, etc.) must be on the trip with them. In addition, no more than two of an employee’s children born on or after October 1, 1998, are eligible for this exemption. For children born before October 1, 1998, there are no age limits. This limitation also does not apply to subsequent multiple births following a single birth.

Key aspects of section 10(5) of the Income Tax Act

To understand the nuances of section 10(5) of the Income Tax Act, let us discuss a few key aspects of this provision, such as the meaning of ‘family,’ the modes of travel recognised and what happens to unused LTC, among other things.

Definition of ‘family’

For the purpose of section 10(5) of the Income Tax Act, the term ‘family’ includes the employee, their spouse and children, and any wholly dependent immediate family members like parents and siblings. In-laws, cousins and distant relatives are not covered under the definition of the term.

Block of four years

As mentioned above, only two journeys in a block of four years are allowed for the exemption under section 10(5). This block of four years is decided by the government. The current LTC block notified by the Central Government is 2026–2029. Employees can generally claim exemption for up to two eligible journeys during this block, subject to the prescribed conditions.

Recognised modes of travel

Travel by road, rail and air are all recognised under section 10(5) of the Income Tax Act. That said, only travel-related expenses can be considered for the LTA exemption. Any other expenses incurred during the journey do not fall within the purview of this section.

Unused LTC

Any unused LTC can be carried forward one time only, to the next block of four years. However, the benefit carried forward should be utilised within the first calendar year of the new four-year block. If one eligible journey remains unclaimed in the previous block, it can generally be carried forward to the first calendar year of the next block, subject to the applicable conditions.

Tax exemption limits

The amount exempted under section 10(5) is limited to the expenses actually incurred during the eligible journeys. For example, say you receive Rs. 50,000 as LTA per annum, but you incur eligible travel-related costs of Rs. 30,000. In this case, only Rs. 30,000 can be claimed under section 10(5). The remaining Rs. 20,000 will be taxable as your income.

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Types of allowances covered under Section 10(5)

Leave travel allowance (LTA) is the amount an employer provides to an employee for travel within India, with or without family.
Reimbursement is allowed only for the cost of public transport such as air travel, train fare, or bus fare.
LTA does not cover expenses like lodging, meals, or entertainment.
Under Section 10(5) and Rule 2B, the LTA amount is exempt from income tax if specified conditions are met.
From 1 April 2021, the provision also applies to the value of any travel concession or assistance received, subject to fulfilment of requirements.

Eligibility to claim benefits under Section 10(5)

The eligible Leave Travel Allowance received by an employee can be claimed as exempt under Section 10(5), subject to the prescribed conditions. Any amount that does not qualify remains taxable.
Eligible salaried employees receiving LTA from their employer can claim the exemption, provided they satisfy the conditions under Section 10(5) and Rule 2B.
The employee must receive a travel subsidy from the current employer for the trip during the fiscal year.

Conclusion

This concludes our guide on section 10(5) of the Income Tax Act. If you are a salaried employee receiving leave travel concession as a part of your salary, you now know how you can use the provisions of section 10(5) to potentially reduce your tax liability. Additionally, you can also curate your investment portfolio to include investments that can simultaneously help you save tax and achieve your financial goals.

One such option is investing in mutual funds, particularly equity funds, which can potentially help create wealth over the long term. Any long-term capital gains earned on such mutual fund schemes are exempt from tax up to Rs. 1.25 lakhs. To tap into this benefit, you can compare mutual funds on the Bajaj Broking website and choose those schemes that align with your risk-return preferences.