The Finance team has just been advised that with FBT being withdrawn Sodexo Vouchers will be taxed. The atxes has to be paid from 1st April 2009. I rue the day the vouchers were introduced - lots of mess with distribution etc and now all employees are coming back with tax queries.
It's much better to give the same money in salary rather than give vouchers, a lot of time, resources and money will be saved.
From India, Mumbai
It's much better to give the same money in salary rather than give vouchers, a lot of time, resources and money will be saved.
From India, Mumbai
Dear Mr. Aakash,
As per my knowledge, there is no such change in the taxability of the meal or gift vouchers. Kindly ask the person advising your finance team for the reference of the change in law which has led to this opinion, please.
If possible please also post the change in law on this site for the benefit of all the members.
From India, New Delhi
117As per my knowledge, there is no such change in the taxability of the meal or gift vouchers. Kindly ask the person advising your finance team for the reference of the change in law which has led to this opinion, please.
If possible please also post the change in law on this site for the benefit of all the members.
From India, New Delhi
As per Rule 3 (7)(iii) of I T Rule , the perquisite of free meal provided by to an employee by an employer is taxable perquisite . The excerpts of the said rule is as under:
(iii) The value of free food and non alcoholic beverages provided by the employer, who is not liable to pay fringe benefit tax under Chapter XIIH of the Act, to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:
Provided that nothing contained in this sub-rule shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed Rs. 50 per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.
Conclusion
1. Maximum amount which is not perquisite for free food is Rs 50 per meal
that too if the food or meal pass is given which can be utilised only on select joints.
2. Meal provided at working hours in office or business premise or off-shor or remote location is also not perquisite.
Links:
From India, Madras
(iii) The value of free food and non alcoholic beverages provided by the employer, who is not liable to pay fringe benefit tax under Chapter XIIH of the Act, to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:
Provided that nothing contained in this sub-rule shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed Rs. 50 per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.
Conclusion
1. Maximum amount which is not perquisite for free food is Rs 50 per meal
that too if the food or meal pass is given which can be utilised only on select joints.
2. Meal provided at working hours in office or business premise or off-shor or remote location is also not perquisite.
Links:
From India, Madras
Every employee can enjoy tax-free Sodexho Pass Gift Vouchers.
However, gifts given would attract a Fringe Benefits Tax on the corporate at the rate of 6.7%(approximately) of the gifting volume.
No FBT on employer
The definition of ‘Fringe Benefit’ under the new chapter XII H (As per subsection (2) of section 115 WB of Income Tax Act, 1961), excludes-
1. Expenditure on, or payment for, food or beverages provided by the employer to his employee in office or factory;
2. Any expenditure on or payment through paid vouchers, which are not transferable and usable only at eating joints or outlets.
In this section, exemption has been granted completely for paid vouchers provided to the employees. Hence there is No FBT on employer on Sodexho Pass meal vouchers given to employees.
Tax free for employees
With the shifting of tax liability on employer from employees in respect to certain fringe benefits, these fringe benefits, which were hitherto taxable in the hands of employees as perquisite, will no longer be taxable in their hands. Thus those items now chargeable to tax under FBT (Chapter XII-H) have been deleted from Rule 3, which dealt with valuation of perquisites in the hands of the employee. Paid Vouchers being one of the items.
Further, Rules for valuation of perquisites have been amended and clause (vi) has been inserted under Section 17(2) vide notification no. 68/2005 dated 28th February, 2005, as follows:
(2) “perquisite” includes-
(vi) the value of any other fringe benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII-H) as may be prescribed:
Since, paid vouchers have been covered under chapter XII H and are also not a prescribed perquisite for valuation they will not be taxable in the hands of employees.
Law on Fringe Benefit Tax: Meal Voucher
From India, Madras
However, gifts given would attract a Fringe Benefits Tax on the corporate at the rate of 6.7%(approximately) of the gifting volume.
No FBT on employer
The definition of ‘Fringe Benefit’ under the new chapter XII H (As per subsection (2) of section 115 WB of Income Tax Act, 1961), excludes-
1. Expenditure on, or payment for, food or beverages provided by the employer to his employee in office or factory;
2. Any expenditure on or payment through paid vouchers, which are not transferable and usable only at eating joints or outlets.
In this section, exemption has been granted completely for paid vouchers provided to the employees. Hence there is No FBT on employer on Sodexho Pass meal vouchers given to employees.
Tax free for employees
With the shifting of tax liability on employer from employees in respect to certain fringe benefits, these fringe benefits, which were hitherto taxable in the hands of employees as perquisite, will no longer be taxable in their hands. Thus those items now chargeable to tax under FBT (Chapter XII-H) have been deleted from Rule 3, which dealt with valuation of perquisites in the hands of the employee. Paid Vouchers being one of the items.
Further, Rules for valuation of perquisites have been amended and clause (vi) has been inserted under Section 17(2) vide notification no. 68/2005 dated 28th February, 2005, as follows:
(2) “perquisite” includes-
(vi) the value of any other fringe benefit or amenity (excluding the fringe benefits chargeable to tax under Chapter XII-H) as may be prescribed:
Since, paid vouchers have been covered under chapter XII H and are also not a prescribed perquisite for valuation they will not be taxable in the hands of employees.
Law on Fringe Benefit Tax: Meal Voucher
From India, Madras
Sodexo has been printing thousands of crores of vouchers from a factory that does not have factory licence, for many years. The company is in big soup, notices has been issued to the company.
From India, Mumbai
From India, Mumbai
Hi Parisha,
went through your suggested site and unfortunately feel that the suggested company is not aware of the laws governing the meal vouchers. i have the following queries unless yours was a advertisement of your company's offering
1. there are only two merchants that to in Pune accepting your card.
2. your card allows purchase of any product when the meal vouchers are supposed to be used only for food and non-alcoholic beverages
3. You cannot load any value on a card / purchase vouchers on your own meal vouchers and claim tax benefit. the same need to be provided to the employees by the employer as salary
However, your product is interesting. I know of a company, i forget the name that provides meal allowance in a law compliant manner over a contactless card as yours. you can reach Uma on 09920 44 6759. They provide the following services
1. consultancy for administering meal allowance as per current laws
2. provide technology solution that helps you do away with the hassles of managing vouchers (procurement, storage, distribution etc)
3. Canteen transaction automation
rgds,
SM
From India, Mumbai
went through your suggested site and unfortunately feel that the suggested company is not aware of the laws governing the meal vouchers. i have the following queries unless yours was a advertisement of your company's offering
1. there are only two merchants that to in Pune accepting your card.
2. your card allows purchase of any product when the meal vouchers are supposed to be used only for food and non-alcoholic beverages
3. You cannot load any value on a card / purchase vouchers on your own meal vouchers and claim tax benefit. the same need to be provided to the employees by the employer as salary
However, your product is interesting. I know of a company, i forget the name that provides meal allowance in a law compliant manner over a contactless card as yours. you can reach Uma on 09920 44 6759. They provide the following services
1. consultancy for administering meal allowance as per current laws
2. provide technology solution that helps you do away with the hassles of managing vouchers (procurement, storage, distribution etc)
3. Canteen transaction automation
rgds,
SM
From India, Mumbai
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