Government staff cannot claim LTC for foreign trips: SC

Leave Travel Concession cannot be claimed for long circuitous trips said the Supreme Court in the State Bank of India vs Assistant Commissioner of Income Tax case


The Supreme Court has ruled that Leave Travel Concession (LTC) cannot be claimed by government employees for foreign travel or for long circuitous trips.

A bench comprising Chief Justice UU Lalit and Justices S Ravindra Bhat and Sudhanshu Dhulia observed that the LTC benefit enjoyed by government employees is exempted as income. Therefore, it is not taxable. However, the bench ruled that the claim against LTC should be made lawfully and within certain boundaries set by the law.

The trip, first and foremost should be undertaken from one location or destination to another within the country. That means, foreign trips, that is, outside of India are not included in this. The Court also pointed out that LTC can be claimed only for the shortest route between the two destinations.

The appeal filed by the State Bank of India (SBI) was dismissed by the SC. The Bank had filed the appeal against a Delhi High Court order passed on 13 January, 2020 upholding the findings of the Income Tax Appellate Tribunal (ITAT) that SBI had failed to deduct the income of its employees at the source. The Bank, it is alleged, had reimbursed the full travel claims of employees who had travelled from Delhi, to Madurai, Columbo and then onwards to Kuala Lampur-Singapore-Columbo-Delhi.

The Income Tax department, however, insisted that this reimbursement violated the LTC scheme and was also against the Income Tax Act and Income Tax Rules. The Bank, however, maintains that only the domestic part of the itinerary was reimbursed and not the foreign travel.

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