Yes, You heard it right. The Government, actually the Income Tax Department wants you to take holidays as Section 10 (5) permits deduction for amount spent on travel.
The Government being the Government has restricted the deduction to only two trips within a block of four calendar years (why calendar when the tax accounting year is March and why not a vacation every year don’t ask).
Also, only travel costs are deductible (not hotel stay and sightseeing costs). And before you pack your bags, only travel within India is deductible. The Government isn’t subsidizing your foreign jauntlet.
Many employees miss out on claiming the deduction available under this section. At a tax rate of 25%, effectively 25% of the travel cost will be borne by the Government.
So go ahead, book that ticket on makemytrip.com and file your LTA claim with your employer and in this years’ tax return. The four-year block is 2018-21.
One important point to note is that LTA can be claimed only if the Employer offers it.
Rupee Tax – making every rupee count