The Income Tax Act defines four-year LTA blocks. The current block is 2022-2025. Employees can claim exemption for two travels within this block. If unused, one journey can be carried forward to the first year of the next block. Zoho Payroll tracks LTA claims submitted by employees, flags unclaimed LTA at year end, and includes taxable LTA in Form 16.
Employees submit LTA claims with travel bills through the ESS portal. The payroll admin approves claims in Zoho Payroll. Approved claims reduce the taxable LTA for that month or year. If no claim is submitted, the full LTA received is treated as taxable income and included in TDS computation. Zoho Payroll does not assume LTA exemption without a formal claim.
Employees who opt for the new income tax regime cannot claim LTA exemption. Zoho Payroll includes the full LTA received in taxable income for TDS computation when the employee’s profile is set to the new regime. This is another key factor employees consider when choosing between tax regimes at the start of the financial year.
LTA (Leave Travel Allowance) is an earning component in Zoho Payroll paid to employees for domestic travel during leave. It qualifies for income tax exemption under Section 10(5) for up to two journeys in a four-year block, provided actual travel bills are submitted. Zoho Payroll manages the claim and tax treatment automatically.
Employees submit LTA claims with supporting bills through the self-service portal. Once approved, Zoho Payroll reduces the taxable LTA by the claimed amount when computing TDS. Unclaimed LTA is treated as fully taxable and reported accordingly in Form 16 at year end.
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