Leave Travel Allowance can be higher and smarter

The current limit of annual LTA at Rs.300,000/- is grossly inadequate. The limit and the methodology needs to be modified. How about this budget?

Leave travel allowance (LTA) is a popular perquisite for employees of public and private sector. However, the limits of Rs.300,000 were set in 1998. Over the last 17 years, the cost and nature of travel have changed drastically. The Union Budget needs to take a look at these new realities and modify accordingly. Let me explain…

The current limit of Rs.300,000/- for LTA needs to be increased to a more realistic level of Rs.800,000/- at the bare minimum. Taking holidays with the family is not just a necessity today, but also helps improve productivity of employees. There is another anomaly of permitting LTA in a block of 2 years only. This is extremely confusing and open to different interpretations. How about make the LTA an annual feature with an annual limit. That will make it simpler as it will coincide with the financial year.

Over the past 15 years, the number of Indians travelling abroad has increased sharply. The current LTA rules of the IT Act still permits LTA as an eligible expense only for domestic travel. That needs to change. LTA can be ideally expanded to include foreign travel too. So the budget can surely make a start. After 17 years it is time to raise the limit of LTA. Simplify it by making it an annual affair instead of complicating it with the ”Block of 2 years” principle. But more importantly, in the era of globalization, it makes little sense to restrict LTA only to domestic travel. Let this budget make a beginning.

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