by Mr.T. E .Gautham, CEO, Hinote Systems,
Chennai
Many employers are under the impression that they need not collect proof
of leave travel as per a Supreme Court judgement. According to the judgement:
There is no circular of Central Board of
Direct Taxes (CBDT) requiring the employer under Section 192 to collect &
examine the supporting evidence to the Declaration to be submitted by an
employee(s).
However, in the TDS circular issued in the recent past, the Income Tax
Department has specified that employers need to collect and scrutinize the
proof of travel (ticket etc.) before granting tax exemption. The relevant
excerpt from the Income Tax Department circular is as follows.
Obligation
of the employer –The employer has to satisfy the obligation that leave travel
(fare)
concession is not taxable in view of section 10(5) the employer is not only
required to
be satisfied
about the provisions of the said clause but also to keep and preserve evidence
in
support
thereof.
All employers should now collect proof of travel from employees if they
wish to grant tax exemption on LTA.
Travel proof..
* In case of air travel - Air
ticket & boarding passes.
* In case of train travel - The train ticket.
* In case of travel by taxi -
The taxi bill should contain the name of the employee, details of the places
visited, distance covered and date of travel.
* If an employee travels with
family, the details of the family members (name, relationship & age) should
be submitted to the employer. The employee should submit a declaration that his
parents, brothers & sisters - whose travel expenses are to be included for
tax exemption are wholly dependent on him/her.
When an employee’s family includes small children &
senior citizens whose travel expenses are sought / or to be included and if First A / C train
fare is the benchmark, employers should use the corresponding train fare of
children & senior citizens for the purpose of tax exemption.
Illustration
An employee travels with his wholly-dependent, 75 year old father on
leave by taxi & incurs taxi fare.
When looking at the corresponding First A / C train fare for comparison,
the employer should consider the discounted train fare which a 75-year old
person is entitled to for the purpose of calculating tax exemption.
 |
| T. E .Gautham |
About Hinote Systems..
Hinote Systems provides services, Software Related to Payroll / HR
Hinote offers payroll services and software to organizations in India.
They currently manage payroll for thousands of employees across customer
organizations all over India.
Customer organizations are from sectors such as manufacturing and
services including Information Technology (IT), Business Process Outsourcing
and the social sector. We have significant expertise in payroll and information
technology.
Email: info@hinote.in
Web Site: www.hinote.in/blog
1, Venkatarathinam Nagar Extn,
Second Street, Adyar, Chennai- 600 020
phone: +9144 4330 7244
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