The LTC received by an employee for himself and his family in with regard to his proceeding on leave to any place in India is exempt under Clause (5) of Section 10. However, this is subject to the conditions prescribed in Rule 2B of the Income Tax Rules, 1962.
In this clause, ‘family’ refers to the following:
- Spouse and children of the individual and
- Parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.
The amount exempt under this clause cannot exceed the amount of expenses actually incurred in this travel.
In respect of the assessment year (AY) 2012-12, Rule 2B mentions that for one year in a block of two years, the LTC is exempt to the extent of actual cost of to and fro tickets, limited to economy class airfare.