Are Sodexo Passes a Tax-Saving Benefit or a Costly Perk for Companies? How to Convince Your Boss

Hi all,

I wanted to know whether giving Sodexo passes to employees will help the companies to save tax on it or if it will be an additional expenditure for the company. I want my company to provide Sodexo passes to a certain level of people. How should I approach my boss and make him understand the importance of the meal vouchers for employee motivation? Please let me know if it will be a burden on the company or not.

Regards,
Suhrita

Suhrita,

Sodexo passes are tax-free. They can be issued to those people who enjoy a higher CTC. So, go ahead and try convincing your management to issue Sodexo passes for your employees. If you want a better idea about it, call the concerned agent and collect the details regarding the same.

Hi Suhrita,

Every employee can enjoy tax-free Sodexo Pass Gift Vouchers.

However, gifts given would attract a Fringe Benefits Tax on the corporation 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 the Income Tax Act, 1961), excludes:

1. Expenditure on, or payment for, food or beverages provided by the employer to his employee in the 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 the employer on Sodexo Pass meal vouchers given to employees.

Tax-free for employees. With the shifting of tax liability on the employer from employees in respect of certain fringe benefits, these fringe benefits, which were hitherto taxable in the hands of employees as a 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 the valuation of perquisites in the hands of the employee. Paid Vouchers being one of the items.

Further, Rules for the 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.

Regards,

Pavan

Yes, it is true that Sodexo meal vouchers do not attract any tax, but there is an upper limit of Rs. 15,600 per annum, and anything above this amount will attract fringe benefit tax.

You also have the option to opt for a Food Plus card, which can be beneficial as the upper limit for non-taxability is Rs. 36,000 per annum.

Hi All,

Please help me in preparing the below policies for an IT organization:

1. Employee welfare activities
2. PMS PPT - what is appraisal, KPA's, KRA's, types of appraisals - general/90/180/360 degrees and which is the best suited as per the present scenario
3. Project trainees policy
4. Probation confirmation format

Thank you very much for your support in advance. :icon1:

Thanks,
Manager HR

Hi Harikumar,

I am also considering implementing the Meal Card option for our company. If your company is currently using this meal card, could you share your experience with using it? What other items besides food and beverages can be purchased using this card?

I look forward to your reply...

Hi Friends,

My Views

Implementing Sodexo passes to the company employees and staff will create a good image of the company. It's one of the new welfare measures, I believe. Cost-wise, we can reduce any other taxable fringe benefits rather than avoid.

Thank you.

Hi,

Meal coupons like Sodexo are exempt from tax. The amount is deducted from the employee's salary. That way, the company is not burdened to pay the amount, although they may need to pay service charges to the service provider.

It helps the employee to reduce the tax liability. You can categorize employees into three groups, say 1000, 2000, 3000, based on their CTC, and make necessary deductions from their salary to issue Sodexo.

Hi, you can add these Sodexo coupons in the reimbursement part for non-taxability.

Regards, Kiran

Hi All,

We are going to stop the Sodexo passes. Since recently, we received new tax benefit/policy details from financial auditors to avoid taxes. I'm not able to gather more proper information. Hence, I request all of you to help on this at the earliest.

Thanks,
Joe
HR

Dear Suhrita,

Sodexo has been introduced recently. It is taxable if you ask for cash payment. The first step is to ask your HR to provide the list of shops (restaurants and also supermarkets) where you can get provisions for your home.

Another thing is you can collect food coupons from the company. It differs from org to org. That is not taxable.

For example, for a managerial position, Sodexo will be Rs. 1400 per month, or you can get coupons for Rs. 50 per day which you can give to the respective restaurants (in the list as I mentioned earlier).

Currently, I am working in an organization where the entire salary is provided as hand salary only, with deductions for professional tax and TDS as applicable. The people in my office mostly fall under the 10% slab only. I wanted to know if giving Sodexo coupons or meal vouchers would actually help motivate them, or if giving cash directly to them would be more beneficial. In the organization where I work, everyone does everything, so everyone is loaded with work all the time.

Currently, I am working in an organization where the entire salary is in-hand, with deductions for professional tax and TDS as applicable. Most people in my office fall under the 10% tax slab. I wanted to know if giving Sodexo coupons or meal vouchers would actually help motivate them, or if giving cash would be more beneficial. In the organization where I work, everyone does everything, so everyone is loaded with work all the time.

Issuance of Food Coupons as Part of CTC

Isn't the issuance of food coupons part of the CTC? For those in the 10% slab, the advantages are less significant. Sodexo passes are accepted in limited merchant establishments, and some stores charge 2-4% extra for using Sodexo in exchange for goods or groceries.

Regards

I do not know about a 2-4% extra processing fee, as when I redeemed Sodexo at an outlet, they charged me for the food and service tax as per the usual trend. Nothing additional was charged from us.

Benefits of Providing Food Coupons

Also, I want to know what benefits an employer would have by providing food coupons?

Understanding Sodexo and Other Food Coupons

Sodexo coupons or any other food coupons are like the usage of a credit card as far as the accepting establishments are concerned. The coupon service providers charge a certain percentage (say 4%) of commission from the merchants while settling the encashment of coupons. Some merchants pass on the commission to the users where they keep lower margins. It is similar to using a credit card where some merchants charge 2-3% extra for select items.

As I said earlier, both employers and employees are exempted from tax subject to the ceiling amount as prescribed under I.T. rules.

Regards,
Pon

Can you please let me know, other than Sodexo passes, any other non-taxable benefits available.

Regards

Can anybody please let me know about the Food Plus card, which was mentioned by someone earlier as non-taxable up to Rs. 36,000 per annum?

HR