Food Coupons When Canteen Is Provided - CiteHR
Industrial Relations
Sr Associate Hr/ir
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Sr. Hr Manager
Hr In Mnc
+3 Others

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Hi All,
Our organisation consists of aroung 700 employees, is issuing food coupons worth Rs.1300/- to all.
I would like to know whether do we need to issue food coupons even we have a canteen?
I am under impression that food coupons are issued on Rs.50/- per meal basis, where the employer could not provide food facility and it is tax exempted.

Dear Mr. Br_Babu 1978 (Ramesh),
Matter of having canteen is not of any issue. One form of food coupons that can be given to employees is "Sudexho Coupons" to meet the food expenses which is non-taxable.
Is your company giving food coupons to the employees' from their CTC to save tax? You may even do so. The coupon can be utilized in your canteen for that reason as food facility to employees. There is ain't on LIMIT for these food/sudexho coupons but need to have a specific amount designed to structure a reasonable amount which may be given to all employees who mostly fall under tax brackets.
Supposedly, an amount (as said by you) of Rs. 50/- perday should cost 50* working days = an amount desired. Since it is tax exempted please make sure that unreasonable worth o f coupons may outlay the employer.

If you are providing canteen facility providing a resonable range of food items, there is no need to provide food coupons. I have not come across any statutory proviison on this issue. Of course, a canteen needs to be provided under Factories Act in a factory employing more than 250 workers.

As mentioned by Sharmila, food coupons are exempted under IT Act for a reasonable amount for total working days in a month. In one of my ex-companies, it was given for 1300/- p.m. & it was tax exempt.
However, if the company provides free or highly subsided meals to its employees in its canteen, than coupons can not be given under tax exempt category, as it amounts to dual facility.

Food vouchers and Canteen have different objectives and purposes they are not substitute to either of.
Canteen is mandatory if you are a Factory under Factories Act and employ more than 250 workers ordinarily.
Food voucher is an option adopted by employer to provide tax benefit to employees within the provisions of IT Act.
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65

Food vouchers can be provided for any amount by any company. the question is regarding its taxability. As per IT Act provisions, it will be considered for exemption only if fully paid canteen facility is not provided by company;
Generaly you will find IT/BPO/ITES companies give Sodexho coupons or meal cards, since they do not provide canteen facilites on company cost. Since, the meals are to be purchased by employees at their own cost, meal coupons provided by such companies will be tax exempt to a reasonable extent.

Dear Dixon
I fully agree with Shalesh.
Moreover, Food vouchers can be a part of CTC; and to an extent tax-free; yet a company can give more than the IT exemption limit.
It is not a substitute for canteen facilities.
Also; even if many IT/ITES companies may not have canteen within their premises; they provide free meal facilities arranged by caterers. I personally am aware of many such companies in Gurgaon and Noida.
Good companies provide maximum facilities to their employees to provide a quality work life; whereas some smaller badly managed companies may think of curtailing such benefits.
Warm regards.

It appears from the discussion above that tax exemption, among other factors, appears to be the key determinative factor in providing food coupns.I would like to ask, for my information,, whether a comapny does not get tax exemption on the expenses which it incurs in running a canteen and for proviiding subsidy (as devlopmental/welfare expenditure or under some othe apropraite item) and if so, whether it can claim exemption both on account of canteen as wellas on account of food coupons and if not, why it should provide food coupons when it runs a canteen.

Dear Ramesh
Instead of levying the employees in the Tax band, you can directly supply Morning & Evening Tea & Snacks alongwith Lunch to all the employees of your organisation and you can book the expenditure incurred on Staff Welfare Account Code by which you can save the tax to your organisation.

Dear Mr.Saikumar,
Food coupons are given predominantly to provide IT exemption to employees. Some companies issue coupons irrespective of the fact that it runs a canteen. As you are aware these coupons are redeemed by employees at food outlets, departmental stores etc and get exempted from IT, companies provide this as a fringe benefit.
In my opinion the company can consider the expenses incurred by it for running a canteen under employee welfare.

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