Leave Travel Allowance (LTA) Exemption 2026: Block-Year Rules, What Actually Counts as Travel, and Why the New Regime Kills It

By Nitish Bharadwaj · Published Jul 28, 2026 · 6 min

Leave Travel Allowance exempts the actual travel fare of a trip within India — airfare, rail, or bus fare by the shortest route — but excludes hotels, food, and local sightseeing entirely. The exemption caps at two journeys in a rolling four-year block, applies only under the old tax regime, and needs proof of actual travel, not just an LTA line on the payslip. This guide covers the current block year, what documentation matters, and why an LTA component in new-regime CTC is fully taxable.

A large share of salary structures in India still include a Leave Travel Allowance component, and a large share of employees claiming it every year get the rules wrong — assuming it covers the whole trip, that it resets annually, or that it survives under whichever tax regime they've picked. None of those are true. LTA exempts a narrower slice of your travel cost than most people assume, runs on a four-year block rather than a financial year, and disappears completely the moment you move to the new tax regime.

What LTA Actually Exempts — And What It Doesn't

Section 10(5) of the Income Tax Act exempts only the actual cost of travel — airfare, rail fare, or fare on another recognised public transport mode — for the shortest available route to your destination and back, for yourself and specified family members. It does not touch hotel stays, food, local sightseeing, entertainment, or any other expense once you arrive. An employee who spends ₹80,000 on a family holiday but only ₹35,000 of that on actual transport fares can claim exemption on the ₹35,000 travel component alone, not the full trip cost.

The Block-Year Rule — Two Journeys in Four Years

LTA exemption isn't an annual entitlement; it's capped at two journeys within a rolling four-calendar-year block fixed by the government, not by your employer or your own joining date. The current block runs 2022–2025, with the next one starting 2026–2029. If you don't use both journeys within a block, one — and only one — unused journey can carry over, but only if you claim it in the first calendar year of the next block; miss that window and the carried-over entitlement simply lapses.

Domestic Travel Only — Even If the Trip Includes an International Leg

The exemption applies strictly to travel within India. If your itinerary mixes a domestic and an international leg — say Delhi to Mumbai to Dubai — exemption is limited to the domestic Delhi–Mumbai fare component alone, calculated as if that had been a standalone trip; the international leg gets no relief at all, no matter how the total ticket is priced or bundled.

The New Tax Regime Doesn't Allow It At All

LTA exemption survives only under the old tax regime. Under the new regime — the default since FY 2023-24 — any LTA component paid by your employer is fully taxable as ordinary salary, exactly like the HRA exemption that also disappears under the new regime. Employees choosing the new regime for its lower slab rates and higher ₹75,000 standard deduction should factor in that LTA, HRA, and most other salary-structure exemptions stop applying entirely — the comparison has to be run on total tax outgo, not on any single deduction in isolation.

Documentation That Actually Matters

• Original travel tickets, boarding passes, or invoices showing the actual fare paid, kept even if your employer doesn't ask for them upfront
• Your employer's LTA claim form, along with a declaration of which family members travelled
• Proof of the shortest-route fare if your actual itinerary took a longer or costlier path, since the exemption is capped at the shortest-route equivalent regardless of what you actually spent
• CBDT circulars allow employers to accept a self-declaration without collecting physical proof for TDS purposes, but retain your tickets regardless — a subsequent scrutiny assessment can still ask for them

Bottom Line

Claim LTA only for domestic travel fares on the shortest route, track which of your two journeys in the current 2022–2025 block you've already used, and keep tickets on file even if your employer doesn't demand them upfront. If you've moved to the new regime, treat any LTA line in your CTC as fully taxable salary rather than a tax-saving component — the same way renters without an HRA component have to look elsewhere for relief once they've made that regime choice.