The LTA and the Income Tax Implications
Leave Travel Allowance is paid along with one"s remuneration. The amount that is paid out has tax exemptions subject to certain conditions. Section 10(5) of the Income Tax Act, entitles full exemption in respect of the value of the allowance received from the employer, only if:

Amount spent should be for self and family
The amount eligible for exemption should be for travel with family, with you as the co-traveler. By family here is meant spouse, up to a maximum of two children (multiple births after one child is accepted), parents, brothers and sisters who are wholly dependent on you.

Amount claimed should be for traveling only
The exemption is only for expenses on traveling, either by road, rail or air, within the country. The traveling expenses should be only for the primary mode of travel from home city to destination city. All expenses incurred on hotel rooms, sightseeing, food, taxi fare, auto fare, porter charges etc… are excluded.

Travel expenses for the shortest route only
The exemption is available in respect to the shortest possible route. In case the journey is performed from the place of origin to destination in a circular or any other manner, then the exemption for that journey will be limited to the shortest route from the place of origin to destination. For air travel, the maximum amount that can be claimed as exemption is the economy class air fare. For rail or road, the maximum amount that can be claimed as exempt is the air conditioned first class rail fare to your destination by the shortest route.