LTA

Querist : Anonymous (Querist) 05 March 2010 This query is : Resolved
I AM LEAVING MY PRESENT COMPANY WHICH I JOINED IN OCT-08. AFTER THAT I HAVE NOT CLAIMED LTA TILL DATE. NOW I AM UNDER FULL AND FINAL SETTLEMNENT. MY ACCOUNT PERSON SAYS HE WILL DEDUCT TAX ON LTA IF I HAVE NOT TAKEN REQUIRED LEAVES. PLEASE LET ME KNOW

A) IS TAKING LEAVES NECESSARY TO KEEP LTA AMOUNT NON-TAXABLE?
B) IF YES IS TAKING LEAVES STILL NECESSARY TO KEEP LTA AMOUNT NON-TAXABLE EVEN WHEN I AM LEAVING? I UNDERSTAND THIS IS TERMINATION OF SERVICES AND IN THIS CASE LEAVES ARE NOT MENDATORY.

APART FROM LTA ISSUE- MY FINANCE PERSON IS ASKING ALL PROOFS OF INVESTMENT BEFORE FULL AND FINAL SETTLEMENT 8.3.2010. MY INVESTMENT DATE IS AFTER 25.3.2010. HE IS SAYING INCASE I DONT SUBMIT PROOF OF 1.0 LAC INVESTEMNT HE WILL DEDUCT TDS. WHILE I UNDERSTAND THAT MY NEXT EMPLOYER SHOULD FINALLY ASK FOR PROOFS OF INVESTMENT AND MY PRESENT EMPLOYER CAN TAKE MY DECLARATION AS FINAL AND CAN AVOID TAX DEDUCTION. PLEASE ADVISE.

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Vineet (Expert) 05 March 2010
For availing Leave Travel Allowance you have to actual travel and claim reimbursement of travelling expenses. If that has not been done the LTA is nothing but part of your salary being paid to you as LTA and thus becomes taxable.

If your querry is regarding encashment of unavailed leaves, the same are exempt subject to overall limit of 300 leaves encashed during the entire carrer.

As far as second query is concerned, the employer is bound to deduct TDS on your salary if you do not provide him proof of investment u/s 80C. Kindly note that deducting correct TDS and payment of same to treasury is their personal liability and therefore they are very much correct in their rights to ask for the proof before allowing any deduction to you for TDS purposes.

Raj Kumar Makkad (Expert) 05 March 2010
I do agree with vineet

Guest (Expert) 05 March 2010
I do agree with Mr Vineet

Querist : Anonymous (Querist) 06 March 2010
Dear Mr. Vineet,

Agreed that actual travel is very much mendatory, but my question is whether taking earned leaves/paid leaves is necessary? what if i have travelled during official holidays-like we had 4 holidays during diwali and i travelled dring those holidays.as far as i know income tax rules does not talk about paid/earned leaves. it talks of travel/proceeding on leaves. Please advise.

Querist : Anonymous (Querist) 06 March 2010
Dear Mr. Vineet,

I do understand it is the legal right of officer incharge for asking proofs. but what incase i am ready to submit proofs by 25.3.10 and not 10.3.10( when i am leaving the organisation)? In my views in that case the organisation can retain the taxable amount with them and can release to me when i submit proofs on 20.3.10. is their any legal issue in doing that? incase i dont submit the proofs the organisation can use that amount in sumission of tax.

also please tell asking to follow above criteria is my legal right or it's only the choice of officer incharge?

Kumar Thadhani (Expert) 06 March 2010
iT IS DUTY OD PRINCIPAL OFFICER OF THE COMPANY WHO IS DUTY BOUND TO DEDUCT TDS FROM SALARY INCOME .your company is insisting you give details of 80-C by 10-3-2010 since any delay on their part for non-deduction of TDS are subject to heavy penalty on part of the company.Hence it is advisable your complete details of your investment under section80-C by theiir prescribed due dates.

Vineet (Expert) 06 March 2010
Dear Mr Anonymous

Whether to avail paid leave or not during LTA depends upon your company rules and the contract which you have signed. It is not a requirement of law.

Coming to second question, once again this is a matter of comfort. Whether the company will trust you for submission of proof post your severance with them. What you are suggesting is nothing but postponement of settlement of accounts. You can very well ask your present employers to withhold settlement of accounts till 25-3-2010 if you trust them.

soumitra basu (Expert) 09 March 2010
It is not your company but you who is asking for rebate/deduction from salary. You have to substantiate that before your employer who is DDO in this respect. Your employer is correct.

LTA

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