Hi All,
I have been seeing a lot of confusion on meal voucher law in this forum. I want to share my understanding for the larger interest of the community here. Opinion is based on govt notification dated Dec 2009 and effective April 2009 without further amendments whatsoever.
1) Meal allowance can be paid in two ways to employee which is considered tax exempt for employee.
(a) Have a canteen and provide them food. Cost of food is tax exempt - this according to me is the age old system but proven over time and is the safest and advisable unless you want to take chances with the law.
(b) Provide meal vouchers that fulfill the following conditions
a) Is usable only for "food and non-alcoholic beverages"
b) Is usable during working hours - Today, modern format stores link your voucher numbers to purchase bills. Also, voucher companies keep records of vouchers issued to employees which is now mandatory. Hence, beware if you are using it for non-food items or during non-working hours. You as well as your company can face embarrassment. I have seen this happening to some companies during tax audits.
c) Provided at the rate of Rs. 50 per meal - common myth is to provide 2 meals a day and hence provide at the rate of Rs 100. But, can you legally establish that your employees stay in office for such long hours that they have both their lunch and dinner in office?
2) Wait for DTC to come in by April 2011 to see if this will be tax exempt at all them
3) Do not forget to take a legal opinion from your own lawyer before deciding rather than getting carried away by marketing gimmicks of vendors
4) Acid test is to see how these vendors structure the meal allowance for their own employees today. I am sure they would not be giving more than the limits mentioned as per my opinion. Even if they were providing more than these limits till last year, they would have made necessary changes this year.
Hope this helps all of you. Would like to answer if there are queries. I am sure most of you using vouchers would not be comfortable but this is the truth. Expecting your comments if any...
rgds,
SM
From India, Mumbai
I have been seeing a lot of confusion on meal voucher law in this forum. I want to share my understanding for the larger interest of the community here. Opinion is based on govt notification dated Dec 2009 and effective April 2009 without further amendments whatsoever.
1) Meal allowance can be paid in two ways to employee which is considered tax exempt for employee.
(a) Have a canteen and provide them food. Cost of food is tax exempt - this according to me is the age old system but proven over time and is the safest and advisable unless you want to take chances with the law.
(b) Provide meal vouchers that fulfill the following conditions
a) Is usable only for "food and non-alcoholic beverages"
b) Is usable during working hours - Today, modern format stores link your voucher numbers to purchase bills. Also, voucher companies keep records of vouchers issued to employees which is now mandatory. Hence, beware if you are using it for non-food items or during non-working hours. You as well as your company can face embarrassment. I have seen this happening to some companies during tax audits.
c) Provided at the rate of Rs. 50 per meal - common myth is to provide 2 meals a day and hence provide at the rate of Rs 100. But, can you legally establish that your employees stay in office for such long hours that they have both their lunch and dinner in office?
2) Wait for DTC to come in by April 2011 to see if this will be tax exempt at all them
3) Do not forget to take a legal opinion from your own lawyer before deciding rather than getting carried away by marketing gimmicks of vendors
4) Acid test is to see how these vendors structure the meal allowance for their own employees today. I am sure they would not be giving more than the limits mentioned as per my opinion. Even if they were providing more than these limits till last year, they would have made necessary changes this year.
Hope this helps all of you. Would like to answer if there are queries. I am sure most of you using vouchers would not be comfortable but this is the truth. Expecting your comments if any...
rgds,
SM
From India, Mumbai
I had explained umpteen times in this forum. Meal vouchers is an instrument at the hands of employee for tax exemption. It has nothing to do with free meal or subsidised meal in the canteen of the respective premises. These coupons, namely sodexho, accor are approved, and meant for the entire family. These can be exchanged for groceries in select stores or spent in select restaurants. The limit prescribed in FY 2010-11 is 1350/- p.m which is totally tax free. The organisations can choose this component in their CTC for the benefit of their employees.
If any doubt, pls do ask.
From India, Lucknow
604If any doubt, pls do ask.
From India, Lucknow
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Sodexho Meal Vouchers .doc
Copy of Sodexo New Meal Gift Form 2009.xls