Sunday, August 11, 2013

LTC :- Exemption of LTC u/s 10(5) in case Twin Child.

                Leave Travel Connection exemption is available u/s 10(5)  up to 2 child and it is a question of exemption when first or second child as twin.   The answer of the question can be clarified with the below example :-

Example :-
  • Amar went to Shri nagar on a holiday on 15.11.2012 with his wife and two children (one son -age 6 years; twin daughters -age 3 years).   They went by aeroplane (economy class) and the total cost of tickets by his employer was Rs. 58000 (Rs. 43000 for adults and Rs. 15000 for the three minor children).  Compute the amount of Leave Travel Concession exempt.

    Will the answer by any different if, among his three children, the twins are 6 years old and son 3 years old ? 
Answer :- 
  •  Section 10(5) exempts the leave travel concession received by an employee from his employer for himself and his family which includes, inter alia, his spouse and children, in connection with proceeding on leave to any place in India.   The exemption is not available to more than two surviving children of an individual.   However, this restriction shall not apply in case of multiple births on the second occasion (i.e. after the first child.)

    In the present case,  Mr. Amar can avail exemption for all his three children since the so's age is more than the age of his twin daughters.   The holiday being in India and the journey being performed by air (economy class),  the entire reimbursement of Rs. 58000 towards leave travel concession met by the employer is fully exempt under section 10(5).

    However, if the twins age is more than the age of the son, Mr. Amar cannot avail exemption for all his three children.   The exemption in respect of leave travel concession under section 10(5) can be availed in respect of only two children.

    The taxable leave travel  concession, in this case will be Rs. 5000, being one-third of Rs. 15000.

    The leave travel concession exempt under section 10(5), in such a case, would be Rs. 53000 (Rs. 58000- Rs 5000)

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