The Hindu Business Line : Leave travel assistance or allowance

So long as the employees were being provided leave travel allowance, the employees were claiming that no tax needs to be deducted on the same as it is exempt on the basis of a self declaration given by the employee.

The employer after changing the name of the allowance as leave travel assistance insists that the same cannot be taken as exempt merely on the basis of a self declaration and that tax will be deducted at source on the same. Kindly clarify whether such leave travel assistance is exempt or is taxable?

Ingorsol

The exemption in respect of leave travel concession or assistance can be availed of under Section 10(5) of the Act. The Act makes no distinction between leave travel concession and assistance for this purpose.

The amount that will qualify for exemption will only be such amount spent by the assessee.

The point for consideration would now be whether the employer can take the leave travel assistance or concession as exempt merely on the basis of a self-declaration by the employee or will have to satisfy itself that the amount has actually been spent.

It is felt that the employer must take reasonable steps to ensure that the employee is seeking to take the benefit of Section 10(5) only to the extent actually spent.

The employer for this purpose may seek bills or vouchers to satisfy itself that the amount has been spent. At any rate it may be mentioned that if the expenditure has actually not been incurred by the employee the question of claiming exemption under Section 10(5) by the employee does not arise.

In other words the exemption under Section 10(5) is not available merely on the basis of a declaration of the assessee but is available only on proving that the expenditure has actually been incurred.

Business Line invites queries on personal taxation issues to this column. Queries may be sent to `Tax Talk', Kasturi Buildings, 859, Anna Salai, Chennai-600002, or by e-mail to taxtalk@thehindu.co.in

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