The court dismissed the appeal filed by SBI against the Delhi High Court judgment which held that the amount received by the SBI employees towards their LTA claims is not liable for the exemption as these employees had visited foreign.

A bench of Chief Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, and Justice Sudhanshu Dhulia observed that the provisions of law prescribe that the airfare between the two points, within India, will be given and the LTA which will be given will be of the shortest route between these two places, which have to be within India.

 “It has already been clarified above, that in view of the provisions of the Act, the moment employees undertake travel with a foreign leg, it is not a travel within India and hence not covered under the provisions of Section 10(5) of the Income Tax Act,” the apex court said.

The Income Tax Act, 1961 provides various exemptions to salaried class. One of such exemptions available to salaried class under the law and also widely used by employers is Leave Travel Allowance (LTA) /Leave Travel Concession(LTC). LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination

What is Leave Travel Allowance (LTA)?

LTA is an exemption for allowance/assistance received by the employee from his employer for travelling on leave

Leave Travel Allowance (LTA) Section 10(5) 

Under clause (5) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,—

(a) on leave to any place in India;

(b) to any place in India after retirement from service or after the termination of his service,

Earlier in June, the Madras High Court in connection with SBI officers’ claims had ruled that reimbursement for international travel is not an absolute right. On June 24, Justice S M Subramaniam dismissed a writ petition from the All India State Bank Officers Federation in Chennai and the All India Bank Officers’ Confederation in New Delhi that contested several orders made in 2014 by the relevant authorities and ordered them to continue providing Leave Travel Concession (LTC) to cover international travel as they had done for bank officers before April 2014.

In dismissing the case, the judge noted that it is in the public’s best interest to adhere to the central government’s policy regarding the LTC given to officers of public sector banks.