Who am I
As the name suggests, I am an allowance you get from your employer to travel anywhere in India while you are on leave. You can even use this facility, if your company allows it, post retirement or after termination of service. Moreover, you get tax exemption on me, subject to certain conditions.
Who can get me
If you are an employee, you can get me for yourself as well as your family, including spouse, a maximum of two children, parents, brothers and sisters, who are your dependants.
When do you get tax exemption
You can claim exemption for up to two journeys in a block of four calendar years.
Remember that only domestic travel is exempt from tax. And that too only the fare; other expenses such as boarding and lodging, conveyance don’t qualify for exemption.
Also, travel expenses for the shortest route to a destination will be exempt even if you have incurred more actual expenses by taking a longer route to the same destination.
Where the journey is performed by air, then the fare for economy class of the national carrier is allowed. If you perform a journey by rail, then AC first-class rail fare would be allowed for exemption. However, if the origin place and destination are connected with rail, but you travel by air, exemption will be allowed only up to the AC first-class rail fare. If not connected by rail, then delux bus fare is allowed.
How to claim exemption
You need to give a written declaration to your company, stating the amount utilized for travelling, along with the relevant bills to support the claim. However, it was held by the Supreme Court that if you submit a declaration stating that you have spent the amount received from the employer, then the company is under no statutory obligation to collect evidence to show the same. But you still need to keep the bills in case your individual case is selected for scrutiny by the tax authorities. Keep in mind that if your children are born before October 1998 then you can claim an exemption for any number of children.
What if you can’t avail exemption
Let’s say, in a particular block you are not able to claim exemption for one or both journeys. Then you can carry forward one journey and claim it in the first calendar year of the succeeding block. After that you can also claim the remaining two journeys of that particular block of four years.