Can Travel expenses of an employee's family be considered?

by Mr.T.E.Gautham, CEO, Hinote Systems, Chennai

The exemption is admissible to only two (2) surviving children born on or after 1 October 1998.  However, if an employee after his or /  her first child, begets twins, triplets etc. the multiple children (twins, triplets etc.) on the second occasion will be counted as one child only.

Can Travel expenses of an employee's family be considered?

Yes, travel expenses incurred on both the employee and his / her family members can be considered for income tax exemption subject to the following conditions.

 (a) The employee should have taken leave from his organization &  travelled along with his / her family members for availing the income tax exemption.

In other words, if an employee does not travel, the travel expenses of his/her  family members can not be considered for tax exemption.

(b). "Family" in this regard means

(i) The spouse and children of the employee, and

(ii) The parents, brothers and sisters of the employee provided that they are wholly or mainly dependent on the employee.

T.E.Gautham

Please note that if the parents, brothers & sisters of the employee are not dependent on the employee, their travel expenses can not be considered for the purpose of tax exemption.

There is a twist with regard to the travel expenses of an employee's children as per sub-rule (4) of rule 2B of the Income Tax Rules.

Tax exemption on LTA is not be admissible to more than two surviving children born after 1 October 1998. This restriction is not however applicable in respect of children born before 1 October 1998, and also in cases where an employee, after getting one child, begets multiple children (twins / triplets / quadruplets, etc.) on the second occasion.

In other words:

 (a). The exemption is admissible to all surviving children born before 1October 1998;

(b) The exemption is admissible to only two (2) surviving children born on or after 1 October 1998.  However, if an employee after his or /  her first child, begets twins, triplets etc. the multiple children (twins, triplets etc.) on the second occasion will be counted as one child only.

Also, Section 2 (15B) of the Income Tax Act defines a child as including step-child and an adopted child of an employee.

Why should the income tax law penalize employees if they have more than 2 children by not extending the law to cover travel expenses of the third (and subsequent) children unless they are twins, triplets etc.?

Why can not the tax department be considerate towards families with more than two children?

Surely, there must be better ways of incentivizing people to keep their families small!

Many people believe that the entire travel expense can be considered for tax exemption.

Not quite. There are many conditions one needs to consider in order to arrive at the exact amount of income  tax exemption.

About Hinote Systems

Hinote offers payroll services and software to organizations in India. We currently manage payroll for thousands of employees across customer organizations all over India. Our customer organizations are from sectors such as manufacturing and services including Information Technology, Business Process Outsourcing and the social sector. We have significant expertise in payroll and information technology.

Hinote Systems

provides services, Software Related to Payroll / HR

Email: info@hinote.in, gautham@hinote.in

Web Site: www.hinote.in/blog

1, Venkatarathinam Nagar Extn,

Second Street,

Adyar,

Chennai-  600 020

Phone: +91 44 4330 7244

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