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LTA exemption is available for 2 journeys in a block of 4 years. The block applicable for the current period is calendar years 2018-21. Leave Travel Allowance (LTA) forms a part of an employee's total CTC (cost-to-company). 1) If an employee not declared LTA but availed Leave and travelled, can he still submit proofs / claim for LTA during Investment proof submission period (end of the year)? 2) Can employee use the full amount reserved (eg. 60K) during 1st trip itself instead of waiting for second trip and claim bills of 1st trip itself? A few standard types of allowances covered under the latest salary components is India are: House Rent Allowance (HRA): This is provided to employees for expenses if they live in a rented establishment. Leave Travel Allowance: LTA is the sum paid by the organisation to compensate for domestic travel expenses of employees. It generally doesn’t. Framework for LTA exemption As per the provisions under the Income-Tax Act, 1961 (Act), exemption for LTA is allowed to an employee for two travels undertaken within a block of four calendar years.
Home » IndiaAM22Tech’s Indian salary calculator is an easy to use app that you can use to find your monthly take-home salary after all deductions like:
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- Income Tax
- Provident Fund
- Professional Tax
- Other Expenses
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What is In-Hand Salary in India?In-Hand salary means ‘Take home’ pay in India. “in-hand” is a word used in daily life to mean the final amount received after the deduction of taxes.
In-Hand Salary = Monthly Gross Income – Income tax – Employee PF – Other deductions if any
The deductions could vary from each company and are based on your CTC (Cost to Company) package.What is deducted from Indian Monthly Salary?Income tax, professional tax, and provident fund are three main deductions from your monthly salary in India.How to use Monthly Salary Calculator India application?AM22Tech’s Indian salary calculator is easy to use if you know your salary package.
Enter the Basic Salary, HRA, and other income as listed on your CTC. The calculator will find the total yearly income tax and then show you the monthly deductions and monthly net income that should be credited in your bank account.
You will see the CTC amount, tax for the whole 12 months, and sample salary slips along with complete tax calculation.
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How do you calculate monthly take home salary?Take-home pay (known as in-hand salary in India) is the net salary after deducting income tax (TDS – tax deducted at source in India) and other deductions, from the gross monthly pay.The calculator can help you find your monthly net salary if you know your salary package.
Basic Salary
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Basic pay or basic allowance is the starting point for any salary offer. Almost all employers base their salary packages on the Basic pay amount.
To start with, most Indian companies keep the Basic pay at 15-20% of total CTC and multinational companies higher Basic at approximately 30% of CTC. Higher Basic pay can be beneficial in saving income tax.
For example, if your Basic pay is 50,000 per month in India, then
#1 HRA is about 40-50% of Basic
You can get more but it does not really matter as income tax India has some clever house rent allowance rules to keep you away from taking tax exemption if you go above a certain amount.
#2 Medical, Conveyance, Food Coupons
Medical, Conveyance and food coupon’s tax exemptions are fixed as per current budget’s tax slabs
#3 LTA is usually kept at 30% of Basic
Many multinational product-based companies like Oracle, Adobe among others keep it equal to Basic.
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My suggestion is to keep LTA equal to Basic if you can negotiate with your employer at job offer time. This will help you in saving income tax later.
#4 Gratuity
Gratuity is 4.81% of Basic as per Indian labor laws. You are eligible for it if you have worked for at least 5 years with your employer.
If you leave before completing 5 years, your employer may not pay you the full amount. In many cases, people negotiate with the new employer to pay them the lost gratuity by way of Joining a bonus. You can negotiate it too if you can.
#5 PF – Employer & Employee
Provident fund or PF is the US style 401k equivalent of monthly deduction in India. This is a mandatory deduction that is normally deducted at the rate of 12% of basic.
Two types of PF:
- Employer contributed – EPF (Employer PF)
- Employee contributed – VPF (Voluntary PF)
As per law, the employer can choose to only pay the 12% of 15,000 if the monthly basic pay is more than 15k.
Most private sector good companies like TCS, Infosys, HCL, Accenture, etc. do pay 12% of actual basic pay. An employer can choose to pay more than 12% too but I have not heard of any being extravagant!
There is a difference between EPF, VPF, and PPF and you should know which one is shown on your salary slip while talking about your CTC package with HR (Human Resource).
#6 Per Diem on Abroad trip
Your per diem or daily allowance is calculated based on your monthly basic pay and in most cases is equal if you are deputed in any Indian city.
If you are sent out of India for a short term business assignment, you are paid per-diem based on that country’s average daily expenses.
For example, if you are going to the US, Australia, UK, or Europe on a business trip, you may expect:
- USA – USD $50-60 per day as your daily expense.
- Australia – AUD $60 per day
- UK – Pound $40 per day
Many people save a part of the per-diem amount and bring it back to India, which becomes taxable and should be added to your Indian income.
This per day is not part of your salary in India until the day you are sent abroad. The Indian employer should keep paying your Indian salary during your trip.
Your Indian salary account should stay active unless you are going for more than 6 months in which case, you can convert it to the NRO account.
Change Salary, Increase In-hand?
If you have the option of changing CTC, here are our suggestions to increase your monthly in-hand salary by changing Basic and other allowances.
Many companies like Tata consultancy services allow their employees to change the salary components apart from basic to reduce their taxes using an internal portal like ‘Ultimatix’.
Check with your company to see if they have any such option.
Do not lose heart if your employer does not allow changing CTC or monthly allowances as per your choice. You can still increase your take-home pay by making full use of the tax exemptions available in Income tax India’s rules.
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Leave Travel Allowance affects every salaried employee. Here we give you a quick low-down on what to expect.
1. You can get LTA only if you have applied for leave from your company and have actually travelled. However, international travel is not valid. You must have travelled within the country.
2. The entire cost of the holiday is not covered. Only the travel costs are covered. So, whether you fly, hop on to a train or take public transport, you will have to show the ticket to claim your LTA. This means you will need to keep your air, rail or public transport ticket.
3. If you travel by car and it is owned by a central government organisation like ITDC, the state government or the local body, then LTA is permitted.
If you could not get public transport and resorted to private transport like renting a car, get a bill issued by the rental company. If the bill is not accepted by your employer, you can always file an income tax return, claim an exemption and get a refund.
4. LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.
For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).
If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.
5. LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).
The current block is 2006-09 -- January 2006 to December 2009. The earlier one was from 2002-05 -- January 2002 to December 2005.
During this time period, a person is entitled to two LTA claims.
6. Though you can claim two journeys in a block of four years, you can claim the LTA benefit just once in a year. You cannot claim both the journeys in one year.
So, while a person can get an income tax exemption for two journeys in a block of four calendar years, he can make a trip only once a year.
If you make two trips in a year, you lose one. One way out is to claim one and make your spouse claim the other.
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7. You can carry forward your LTA. One LTA can be brought forward and claimed in the first year of the next block.
Let's say you do not take your LTA in 2002-05. Or that you use only one LTA. Don't worry, you will be able to take the pending LTA in 2006. This means that, in the 2006-09 block, you will be totally entitled to the three journeys.
8. If you switch jobs, you can get the LTA not only from your present organisation but also from your former employer, if the concession is lying unutilised.
Let's say that, in the 2002-05 block, you claimed LTA in 2003. In 2004, you switched jobs. You can still claim your second journey with your new employer. Of course, your new employer will ask to look at your earlier tax returns to see whether it has been claimed or not.
9. You must take the shortest route to your destination to be eligible for LTA.
Let's say you are going from Delhi to Mumbai on a holiday. So the cost of your travel from Delhi to Mumbai and Mumbai to Delhi will be eligible for LTA.
If you decide to go to Mumbai via Agra, Jhansi and Itarsi, your LTA from Delhi to Agra will be covered. But Agra to Mumbai will not be covered.
Let's take another scenario. You traveled from Mumbai -- Kerala -- Delhi -- Mumbai.
If you take a direct connection, you will be eligible for LTA. Mumbai -- Kerala -- Delhi -- Mumbai: LTA covered
But if you throw in Hyderabad, then it goes out of gear.
Mumbai -- Thiruvananthapuram: LTA covered
Thiruvananthapuram -- Hyderabad -- Delhi: LTA not covered
Delhi -- Mumbai: LTA covered
10. If your LTA is not utilised, it gets added to your salary and you will be taxed on it.
Let's say you and your spouse are both employed and both have LTA as part of the salary package. Your LTA is Rs 20,000 and hers is Rs 20,000 too.
Both of you and your child go for a holiday. The tickets for the three of you amount to Rs 15,000. You supply the tickets to your office and this amount will be eligible for a tax deduction; the balance Rs 5,000 will be taxed. You can claim exemption only to the tune of your expenditure.
If you claim this, your spouse will not be able to claim this same holiday from her employer. His/ Her Rs 20,000 will be taxed. Unless, of course, you go for another holiday and he/ she claims it.