Dear HR Managers,
I would like to inform all of you that if you are issuing meal vouchers to your employees in India, you need to look at the fine prints that the voucher companies have mentioned on the contract as well as on the back of the vouchers to indemnify themselves from the risk that you as a company might be taking on yourself / on your employees.
As per IT notification dated December 2009, Meal value is not taxable in the hands of the employees if
1) Free / subsidized meals are provided by the company to the employees
2) If the allowance is provided through meal vouchers that fulfills the following criteria
a) Should not be transferable
b) Should be usable only in eating joints - No grocery purchase
c) Usable only at the rate of Rs 50/- per meal
d) used during working hours by the employees
These conditions are well understood by the voucher companies and appropriate statements are included in the "terms and conditions" section of the contract, behind each meal voucher and on their website that protects them well. The tone of the notification clearly points at promoting canteen setups within the companies. Next time your Sodexo sales guy tells you to issue meal vouchers to your employee at the rate of more than Rs 50/- per meal, do check the following from him
1) At what rate is his own company providing meal allowance to him ? is this lower than what he used to get till December 2009? Ask for proofs and be careful about the legal opinion they will flash from a rather seedy lawyer.
2) Can they indemnify your company if the employees are penalised for mis-use? Can your employees transfer the vouchers and use if for grocery purchase in retails malls and also exhaust the entire booklet in one shot?
3) Are the vouchers going to be treated at par with cash in their outlets? if not, think if you are indeed profitable after saving tax on the voucher and paying at a higher rate for your purchases. Think about the hassles, risk of loss, advance payment... My calculation says, on an average all your employees would save ~14% tax and lose well over 16%
Recently, I came to know from some sources that the Income tax department has taken the mis-use of meal voucher by employees very seriously and are working on steps that may lead to penal action. I would like you all to take legal advice and be safe. But yes, I have only raised issues with meal vouchers. I am sure you would be looking for solutions. I suggest the following solutions
1) Focus on your own cafeteria and provide a free / a subsidised meals to your employees. Employees not using the cafeteria could be compensated. this can be easily done if you manage this electronically. Camp card solution (P) Ltd Mumbai. has done it for us. You can also approach others as well like Miracle software (P) Ltd, Pune, all leading banks, Cubex India solutions etc. Banks like HDFC, Citi, Axis have their meal cards which you can provide to your employees and ask the bank to deploy their card terminal in your cafeteria and restrict usage of the card on that terminal only. However, in campus transactions, smart card especially contact less cards scores over magnetic strip cards of the bank. I would recommend Campcard's system both in terms of their quality, focus on product, service standards as well as their overall understanding on meal allowance laws.
2) Provide meal vouchers to your employees and launch an awareness campaign amongst the employees with the conditions of usage and take written commitments from them on the usage.
I would welcome some other HR managers to contribute to this so that I can post a ready reckoner on meal vouchers for everybody's reference and also update the same on an ongoing basis. I have mentioned one topic and wish similar other topics relevant for HR managers be picked up and championed by our fellow colleagues for the larger benefit!
Warm regards,
Manjari
From India, Mumbai
I would like to inform all of you that if you are issuing meal vouchers to your employees in India, you need to look at the fine prints that the voucher companies have mentioned on the contract as well as on the back of the vouchers to indemnify themselves from the risk that you as a company might be taking on yourself / on your employees.
As per IT notification dated December 2009, Meal value is not taxable in the hands of the employees if
1) Free / subsidized meals are provided by the company to the employees
2) If the allowance is provided through meal vouchers that fulfills the following criteria
a) Should not be transferable
b) Should be usable only in eating joints - No grocery purchase
c) Usable only at the rate of Rs 50/- per meal
d) used during working hours by the employees
These conditions are well understood by the voucher companies and appropriate statements are included in the "terms and conditions" section of the contract, behind each meal voucher and on their website that protects them well. The tone of the notification clearly points at promoting canteen setups within the companies. Next time your Sodexo sales guy tells you to issue meal vouchers to your employee at the rate of more than Rs 50/- per meal, do check the following from him
1) At what rate is his own company providing meal allowance to him ? is this lower than what he used to get till December 2009? Ask for proofs and be careful about the legal opinion they will flash from a rather seedy lawyer.
2) Can they indemnify your company if the employees are penalised for mis-use? Can your employees transfer the vouchers and use if for grocery purchase in retails malls and also exhaust the entire booklet in one shot?
3) Are the vouchers going to be treated at par with cash in their outlets? if not, think if you are indeed profitable after saving tax on the voucher and paying at a higher rate for your purchases. Think about the hassles, risk of loss, advance payment... My calculation says, on an average all your employees would save ~14% tax and lose well over 16%
Recently, I came to know from some sources that the Income tax department has taken the mis-use of meal voucher by employees very seriously and are working on steps that may lead to penal action. I would like you all to take legal advice and be safe. But yes, I have only raised issues with meal vouchers. I am sure you would be looking for solutions. I suggest the following solutions
1) Focus on your own cafeteria and provide a free / a subsidised meals to your employees. Employees not using the cafeteria could be compensated. this can be easily done if you manage this electronically. Camp card solution (P) Ltd Mumbai. has done it for us. You can also approach others as well like Miracle software (P) Ltd, Pune, all leading banks, Cubex India solutions etc. Banks like HDFC, Citi, Axis have their meal cards which you can provide to your employees and ask the bank to deploy their card terminal in your cafeteria and restrict usage of the card on that terminal only. However, in campus transactions, smart card especially contact less cards scores over magnetic strip cards of the bank. I would recommend Campcard's system both in terms of their quality, focus on product, service standards as well as their overall understanding on meal allowance laws.
2) Provide meal vouchers to your employees and launch an awareness campaign amongst the employees with the conditions of usage and take written commitments from them on the usage.
I would welcome some other HR managers to contribute to this so that I can post a ready reckoner on meal vouchers for everybody's reference and also update the same on an ongoing basis. I have mentioned one topic and wish similar other topics relevant for HR managers be picked up and championed by our fellow colleagues for the larger benefit!
Warm regards,
Manjari
From India, Mumbai
Dear Manjari,
Thanks a ton for the useful update. In fact I was contemplating on this matter for quite sometime. Timely input from you.
I appreciate the pains that you have taken to collect and collate so much of information and publish it over here.
Regards
M.V.KANNAN
From India, Madras
257Thanks a ton for the useful update. In fact I was contemplating on this matter for quite sometime. Timely input from you.
I appreciate the pains that you have taken to collect and collate so much of information and publish it over here.
Regards
M.V.KANNAN
From India, Madras
Thank you Mr. Kannan! I would also request you to share your inputs that I might have missed our here. Requesting other HR managers as well for their contribution. regards, Manjari
From India, Mumbai
From India, Mumbai
Thanks for the updates Manjari. Good to hear on a less spoken subject. Wish to hear a lot more from u. Kindly get in touch on 9820535166 on priority (if possible). Regards AKSHAY
From India, Mumbai
From India, Mumbai
Dear Traint
With regference to "b) Should be usable only in eating joints - No grocery purchase"; do you have any information on whether any directives/notifications have been issued to Grocery and other stores - 'non-eating joints' - not to accept such meal vouchers ??
One can still find some large-format retail stores/malls (not having any eating facility) still accepting such vouchers.
Warm regards.
From India, Delhi
With regference to "b) Should be usable only in eating joints - No grocery purchase"; do you have any information on whether any directives/notifications have been issued to Grocery and other stores - 'non-eating joints' - not to accept such meal vouchers ??
One can still find some large-format retail stores/malls (not having any eating facility) still accepting such vouchers.
Warm regards.
From India, Delhi
Thanks to our government and the income tax department. Both the taineted entities want to find various ways to stop salary earning employees from getting even a micron of benefit in any form and would not even think twice before applying taxes on the same in one form or the other.
Even if the income tax department works hard day and night and issues policies and raids, have you thought what they will save???? Only a few crore rupees........now if the government and the income tax department work together to even evaluate one big mega project or undertaking in this country, they will save thousands of crores and that too with less manpower hours.........such is the pathetic way of life here..........talk big think small, work narrow.........so much show off in this country whereas in reality no real development has taken place for the working class since the past 25years and taxation on each and everything (vat, cst, service, you name it and the tax is there).....first you pay vat & service tax on a product and then you once again pay the government tax on the entire amount of the product in your annual books........and further they are still working overtime to find some more new ways of taxation so that the scams in this country which run in thousand crores and become lakh crores.....................................rgrds
From India, Mumbai
Even if the income tax department works hard day and night and issues policies and raids, have you thought what they will save???? Only a few crore rupees........now if the government and the income tax department work together to even evaluate one big mega project or undertaking in this country, they will save thousands of crores and that too with less manpower hours.........such is the pathetic way of life here..........talk big think small, work narrow.........so much show off in this country whereas in reality no real development has taken place for the working class since the past 25years and taxation on each and everything (vat, cst, service, you name it and the tax is there).....first you pay vat & service tax on a product and then you once again pay the government tax on the entire amount of the product in your annual books........and further they are still working overtime to find some more new ways of taxation so that the scams in this country which run in thousand crores and become lakh crores.....................................rgrds
From India, Mumbai
Dear Mr. Akshyay,
I am proud if you feel I am talking about a lesser know subject as these are the cracks that more often than not, we tend to relegate to levels in pursuit of a "big bang theory" that have led to court battles for companies.
I have started this discussion to seek inputs from all members and hence would like to abstain from one to one discussions as mentioned by you. Should there be anything that you want to discuss with me, you are welcome to post the same on this site for the larger interest of all.
Warm regards,
Manjari
From India, Mumbai
I am proud if you feel I am talking about a lesser know subject as these are the cracks that more often than not, we tend to relegate to levels in pursuit of a "big bang theory" that have led to court battles for companies.
I have started this discussion to seek inputs from all members and hence would like to abstain from one to one discussions as mentioned by you. Should there be anything that you want to discuss with me, you are welcome to post the same on this site for the larger interest of all.
Warm regards,
Manjari
From India, Mumbai
Dear Raj,
Yes you are right in your observation that non-eating joint still accept meal vouchers. I believe the same could be because of one/more of these:
1) Earlier law on meal allowance was not clear on this and the clarity detailed in the recent notification has perhaps not reached such outlets. Questions we need to ponder over are- who is responsible for this? who is at risk? what can be the impact? etc.
2) Outlets accepting meal vouchers are affiliated by the voucher companies for us. If they have signed up with such companies intentionally withholding the legal aspect, the outlets are bound to accept. Again, the question in point 1 above remains...I understand that the contract that these voucher companies sign with the outlets mentions that the outlet is responsible for adhering to the law. I don't know if most of the outlets would have read and understood the legalities...
3) The voucher companies have already indemnified themselves in the contract that they have signed with you may be mentioning that "it is not a contract, it is just a registration documents that our company policy requires" and hence are least bothered of any hassles that you and your employees may face.
4) Never has meal allowance law been clear enough and the voucher companies (i believe) have been leveraging the same basis various interpretations. I salute Mr. Modi who was in chair in Central Board of Direct Taxes (CBDT) in 2005 when the law was the same as what is mentioned in the current notification. He had regulated the voucher companies wherein they had to re-configure the outlets that accept meal vouchers. "No grocery outlet was allowed to accept vouchers". Subsequently the law changed with introduction of FBT. But, today, when the same old law is back, who is taking charge? Is Mr. Modi listening? Is the IT department listening or is their bandwidth choked with various other scams... Are we (as employees) preparing them for the next scam. I am sure not!
Hope this answers your queries. would appreciate your comments on the insights. I once gain urge all members to respond to the posts with their inputs so that the knowledge shared helps all of us... Thanks all of you in advance!
Warms regards,
Manjari
From India, Mumbai
Yes you are right in your observation that non-eating joint still accept meal vouchers. I believe the same could be because of one/more of these:
1) Earlier law on meal allowance was not clear on this and the clarity detailed in the recent notification has perhaps not reached such outlets. Questions we need to ponder over are- who is responsible for this? who is at risk? what can be the impact? etc.
2) Outlets accepting meal vouchers are affiliated by the voucher companies for us. If they have signed up with such companies intentionally withholding the legal aspect, the outlets are bound to accept. Again, the question in point 1 above remains...I understand that the contract that these voucher companies sign with the outlets mentions that the outlet is responsible for adhering to the law. I don't know if most of the outlets would have read and understood the legalities...
3) The voucher companies have already indemnified themselves in the contract that they have signed with you may be mentioning that "it is not a contract, it is just a registration documents that our company policy requires" and hence are least bothered of any hassles that you and your employees may face.
4) Never has meal allowance law been clear enough and the voucher companies (i believe) have been leveraging the same basis various interpretations. I salute Mr. Modi who was in chair in Central Board of Direct Taxes (CBDT) in 2005 when the law was the same as what is mentioned in the current notification. He had regulated the voucher companies wherein they had to re-configure the outlets that accept meal vouchers. "No grocery outlet was allowed to accept vouchers". Subsequently the law changed with introduction of FBT. But, today, when the same old law is back, who is taking charge? Is Mr. Modi listening? Is the IT department listening or is their bandwidth choked with various other scams... Are we (as employees) preparing them for the next scam. I am sure not!
Hope this answers your queries. would appreciate your comments on the insights. I once gain urge all members to respond to the posts with their inputs so that the knowledge shared helps all of us... Thanks all of you in advance!
Warms regards,
Manjari
From India, Mumbai
Dear 28677c5420521383353edc6e6,
I am sorry to address you as above and would have liked to address you personally if you had mentioned your name in your post. I hope there is no other reason for you to hide your identity!
I empathise with you on various taxes levied by the Indian government. I agree with you that there should be constant focus to check mega frauds. But would that really address your pain? Your pain (according to me) will get addresses when ALL OF US do not think about evading tax and contribute the right amount to the government. I feel if even most of us (esp. businessmen) do this, the government will think about decreasing the tax rate and will give us the right to talk and challenge the government. We all can begin by understanding and adhering to the law on meal allowance while using meal vouchers. they are
1) Use the meal vouchers your self. do not give it to your wife even.
2) Use the same only when you are at work.
3) use it only at the rate of Rs 50/- per meal
4) Use it only in eating joints. Do not purchase groceries. rather challenge the outlet if he accepts it.
Warm regards,
Manjari
From India, Mumbai
I am sorry to address you as above and would have liked to address you personally if you had mentioned your name in your post. I hope there is no other reason for you to hide your identity!
I empathise with you on various taxes levied by the Indian government. I agree with you that there should be constant focus to check mega frauds. But would that really address your pain? Your pain (according to me) will get addresses when ALL OF US do not think about evading tax and contribute the right amount to the government. I feel if even most of us (esp. businessmen) do this, the government will think about decreasing the tax rate and will give us the right to talk and challenge the government. We all can begin by understanding and adhering to the law on meal allowance while using meal vouchers. they are
1) Use the meal vouchers your self. do not give it to your wife even.
2) Use the same only when you are at work.
3) use it only at the rate of Rs 50/- per meal
4) Use it only in eating joints. Do not purchase groceries. rather challenge the outlet if he accepts it.
Warm regards,
Manjari
From India, Mumbai
Dear Manjari
Thanks for your response to my post, as well as other' posts.
I agree with your views, especially the ones quoted below :
"when ALL OF US do not think about evading tax and contribute the right amount to the government. I feel if even most of us (esp. businessmen) do this, the government will think about decreasing the tax rate and will give us the right to talk and challenge the government. We all can begin by understanding and adhering to the law on meal allowance while using meal vouchers. they are
1) Use the meal vouchers your self. do not give it to your wife even.
2) Use the same only when you are at work.
3) use it only at the rate of Rs 50/- per meal
4) Use it only in eating joints. Do not purchase groceries. rather challenge the outlet if he accepts it.
It reminds me of what Mahatma Gandhi said, "You must be the change you want to see in the world. "
This is not to question your identity or bonafides; and you may choose not to answer; but I am curious to know whether you are a 'lobbyist' working for an organization/cause or out of your own conviction/passion.
Warm regards.
From India, Delhi
Thanks for your response to my post, as well as other' posts.
I agree with your views, especially the ones quoted below :
"when ALL OF US do not think about evading tax and contribute the right amount to the government. I feel if even most of us (esp. businessmen) do this, the government will think about decreasing the tax rate and will give us the right to talk and challenge the government. We all can begin by understanding and adhering to the law on meal allowance while using meal vouchers. they are
1) Use the meal vouchers your self. do not give it to your wife even.
2) Use the same only when you are at work.
3) use it only at the rate of Rs 50/- per meal
4) Use it only in eating joints. Do not purchase groceries. rather challenge the outlet if he accepts it.
It reminds me of what Mahatma Gandhi said, "You must be the change you want to see in the world. "
This is not to question your identity or bonafides; and you may choose not to answer; but I am curious to know whether you are a 'lobbyist' working for an organization/cause or out of your own conviction/passion.
Warm regards.
From India, Delhi
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Maharashtra Special allowance Notification July 14 to Dec 14.pdf