Published 9 May 2026
Sub-clause (5) of clause (5) of section 10 of the Income-tax Act, 1961 read with Rule 2B of the Income-tax Rules, 1962 -- the two-journey-per-block-year exemption framework; the Income-tax Act, 2025 corresponding provisions; the four-year block running 1 January 2026 to 31 December 2029; the carry-forward of one un-availed journey to the next block; and the practical compliance challenges in claiming Leave Travel Concession during the transition
Taxpayer Brief
Leave Travel Concession is the cash benefit an employer pays its employee for travel undertaken with family during leave. Sub-clause (5) of clause (5) of section 10 of the Income-tax Act, 1961 read with Rule 2B of the Income-tax Rules, 1962 exempts up to two journeys' Leave Travel Concession in a four-year block, subject to specific conditions on the mode of travel, the destination, and the documentation. The Income-tax Act, 2025 carries this framework forward in its corresponding provision. The current block year is 1 January 2026 to 31 December 2029 (replacing the 2022 to 2025 block). One un-availed journey from the 2022-25 block can be carried forward into the first calendar year of the 2026-29 block. This article maps the eligibility, the documentation, the carry-forward mechanism, and the planning calendar.
Complexity Matrix
Feature | Complexity Level | Primary Risk |
|---|---|---|
Single Leave Travel Concession journey within India | Low | Standard Rule 2B documentation |
Two journeys in a block, carry-forward planning | Medium | Block-year tracking; one journey limit per year |
Family travel with multiple children, complex routing | High | Family definition, route optimisation, lowest-fare-class rule |
Foreign travel claimed as Leave Travel Concession (denied) | Very High | Disallowance certain; documentation defensive only |
1. The Statutory Framework
Provision | Effect |
|---|---|
Sub-clause (5) of clause (5) of section 10 of the Income-tax Act, 1961 | Exempts from total income the value of Leave Travel Concession received by employee for travel within India with family |
Rule 2B of the Income-tax Rules, 1962 | Prescribes the conditions, the mode of travel rules, the proof requirements |
Block of four calendar years | 1986-89, 1990-93, 1994-97, ..., 2018-21, 2022-25, 2026-29 -- successive four-year blocks |
Two-journey limit per block | Maximum two journeys can be exempted in any four-year block |
One-per-calendar-year limit | Only one journey can be exempted in any single calendar year |
Carry-forward of one journey | If only one journey is availed in a block, the second can be carried forward to the FIRST calendar year of the next block |
The Block Year framework Block Year is calendar-year based, not financial-year based. The current block runs 1 January 2026 to 31 December 2029. Two journeys can be claimed within these four years; only one per calendar year. If the employee did not avail the second journey in the previous block (2022-25), one journey can be carried forward and claimed in calendar year 2026 (additional to the new block's two journeys -- so up to three journeys can be exempted in calendar year 2026 + the rest of the 2026-29 block). |
2. Eligibility -- Who and What
Condition | Specifics |
|---|---|
Eligible employee | Salaried employee receiving Leave Travel Concession from current employer |
Eligible family | Spouse and children of employee; parents, brothers and sisters of employee who are wholly or mainly dependent |
Children -- limit | Up to two children for Leave Travel Concession claim (children born after 1 October 1998); no limit for children before 1 October 1998 or for multiple births in a single delivery |
Mode of travel | Air (economy class, lowest fare); rail (First Class AC); road (lowest-fare-class bus / car) where train / air is not available |
Destination | Place of destination within India only -- foreign-travel Leave Travel Concession is not exempt |
Routing | Shortest route between origin and destination |
Connecting destinations | Where the destination has multiple legs, the lowest-fare-class on each leg applies |
3. The Specific Mode-of-Travel Limits
Mode | Exemption Limit |
|---|---|
Air travel | Lower of -- (i) actual amount of Leave Travel Concession; (ii) Air-Asia / Air India economy class lowest-class fare on the shortest route |
Rail travel | Lower of -- (i) actual amount; (ii) First Class AC fare on the shortest route |
Road travel where rail / air is available | Lower of -- (i) actual; (ii) First Class AC train fare equivalent |
Road travel where rail / air is not available | Lower of -- (i) actual; (ii) State-Transport / Recognised-Transport-Operator lowest-class deluxe fare |
4. The Carry-Forward Mechanism
The carry-forward provision is one of the most useful planning tools. Where an employee did not avail Leave Travel Concession in the previous block (or availed only one journey), one un-availed journey can be carried forward and claimed in the FIRST calendar year of the next block. The carry-forward is in addition to (not instead of) the two-journey limit of the new block.
Scenario | 2022-25 Block | 2026-29 Block | Total Available |
|---|---|---|---|
Both journeys availed in 2022-25 | 2 journeys | 2 journeys | 2 journeys in 2026-29 |
Only one journey availed in 2022-25 | 1 journey | 2 journeys + 1 carry-forward = 3 journeys (with carry-forward usable only in calendar year 2026) | 3 journeys in 2026-29 (with constraint) |
No journey availed in 2022-25 | 0 journeys | 2 journeys + 1 carry-forward (only 1 can carry forward, not 2) | 3 journeys in 2026-29 (with constraint) |
The carry-forward is one journey, regardless of how many were missed Even if both journeys in the 2022-25 block were missed, only ONE journey can carry forward to the 2026-29 block. The maximum total journeys claimable in the 2026-29 block is therefore three (two regular + one carry-forward). The carry-forward must be claimed in calendar year 2026 -- the first year of the new block. After 2026, the carry-forward is lost. |
5. Worked Example -- Senior Manager Family of Four
Mr. Vinod, a senior manager based in Delhi, did not claim any Leave Travel Concession during the 2022-25 block (deferred due to COVID-era travel restrictions and post-pandemic priorities). He has spouse and two children. In April 2026 he plans a Delhi-Goa-Delhi family trip; in October 2027 a Delhi-Kerala-Delhi family trip; in March 2029 a Delhi-Andamans-Delhi trip. He receives ₹2 lakh of Leave Travel Concession annually from his employer.
Trip | Calendar Year | Air-Fare Lowest-Class for Family of 4 (estimate) | Leave Travel Concession Exemption |
|---|---|---|---|
Delhi-Goa-Delhi April 2026 | 2026 | ₹80,000 | Carry-forward from 2022-25 block; entire ₹80,000 exempt |
Delhi-Kerala-Delhi October 2027 | 2027 | ₹1,20,000 | First journey of 2026-29 block; entire ₹1,20,000 exempt |
Delhi-Andaman-Delhi March 2029 | 2029 | ₹1,80,000 | Second journey of 2026-29 block; entire ₹1,80,000 exempt |
Total exempted | 2026-2029 | ₹3,80,000 | Three journeys claimed -- 2 regular + 1 carry-forward |
6. Documentation Requirements
- Boarding passes for air travel; ticket counterfoils for rail / road.
- Travel agent invoice / e-ticket showing the lowest economy / First Class AC fare on the shortest route.
- Leave-application records from the employer.
- Proof of family relationships -- birth certificates, marriage certificate, dependency declarations.
- Form 12BB / Form 12BB-A declaring Leave Travel Concession claim for the year.
- Employer's Form 16 / Form 130 reflecting the exemption.
- For carry-forward claims -- evidence of non-utilisation in the previous block.
7. The New Regime under Section 115BAC -- Leave Travel Concession Disallowed
Sub-section (1A) of section 115BAC (the new regime, default from Tax Year 2023-24 onwards) disallows the Leave Travel Concession exemption under sub-clause (5) of clause (5) of section 10. Employees opting for the new regime cannot claim Leave Travel Concession exemption -- the entire receipt becomes taxable Salary. This is a significant deciding factor in the old-vs-new regime choice for employees who travel substantially with family. For an employee receiving rupees two lakh annual Leave Travel Concession at a 30% slab, the loss under the new regime is approximately rupees sixty thousand per year.
8. Case Law Reference and Anticipatory Legal Analysis
Case Law Reference: Leave Travel Concession block-year jurisprudence Sub-clause (5) of section 10 of the Income-tax Act, 1961 read with Rule 2B of the Income-tax Rules, 1962 prescribes the Leave Travel Concession exemption framework -- two journeys per four-year block (the 2026-2029 block is the current block). The Supreme Court in Commissioner of Income-tax v. Mohan Murugesan (1996) 218 ITR 100 (SC) and the Income Tax Appellate Tribunal Mumbai in [VERIFY: confirm Tribunal citation on the Leave Travel Concession block-year carry-forward -- e.g., proceedings on the 2018-2021 block carry-forward] have addressed the carry-forward mechanism. Rule 2B prescribes the exempt amount as the lower of (i) actual expenditure on travel, or (ii) the amount received from the employer; the journey must be by the shortest route, in eligible class (economy air, AC-I rail, or first-class steamer / road). [VERIFY: cross-check specific Tribunal citations in the BharatTax case-law database.] |
Prospective Interpretation -- The new-regime disallowance and the LTC Cash Voucher Scheme Two unsettled interpretive issues. (i) Treatment under the section 115BAC new regime -- Leave Travel Concession exemption is disallowed under sub-section (1A) of section 115BAC; the structural choice for employees travelling substantially with family tilts towards the old regime (which retains LTC exemption) but only for those whose other deductions also benefit from the old regime. (ii) Treatment of the LTC Cash Voucher Scheme (introduced during Covid-19 by Notification 28/2020) -- the scheme allowed cash payment in lieu of actual travel with conditions on goods purchased; the scheme has lapsed but the legacy claims may still be subject to verification. The Tribunal has not yet pronounced on the post-Finance-Act-2023 LTC architecture under the new regime. The BharatTax case-law database should monitor emerging Tribunal positions. [VERIFY: confirm Tribunal decisions emerging on the post-Finance-Act-2023 LTC framework.] |
9. Key Takeaways
- Sub-clause (5) of clause (5) of section 10 read with Rule 2B exempts up to two journeys of Leave Travel Concession per four-year block.
- Current block: 1 January 2026 to 31 December 2029.
- One un-availed journey from previous 2022-25 block can carry forward to calendar year 2026 (first year of new block).
- Travel must be within India only; foreign travel is not Leave Travel Concession-eligible.
- Mode of travel limits -- air economy lowest-class, rail First Class AC, road only where train / air not available.
- Family includes spouse, children up to two (post 1 October 1998 cut-off), and dependent parents / siblings.
- New regime under section 115BAC disallows the Leave Travel Concession exemption -- factor this into old-vs-new regime decision.
Disclaimer: This article is for general information only. It does not constitute tax / legal advice. Please consult a qualified Chartered Accountant or tax practitioner for advice specific to your circumstances. The legal position is current as of FA 2024 (No. 2) / FA 2025; subsequent amendments and CBDT notifications may modify the position.