Can We Offer Cash Instead of Sodexo Meal Coupons Without Compliance Issues?

If the company announces the staff benefit as giving Sodexo Meal/Food coupons at Rs. 1,300/month, a few employees have requested that, instead of Sodexo coupons, the benefit should be paid in cash. My question to my seniors is whether this type of benefit can be reimbursed in cash or not. Furthermore, if it is paid in cash, does this cash transaction attract PF compliance, or is it justified to compensate the declared benefit in cash?

Regards,
Kosh

Dear Friend,

Sodexo pass is one of the tax-saving options for employees. In lieu of this, the company cannot give a cash benefit. If any employee does not want to avail/take Sodexo passes, he can request the HR/Finance department to stop issuing Sodexo coupons. Based on the request, they can transfer the amount to special allowance, which is taxable.

The aforementioned answer is according to my view only. If you wait some more time, I am sure our seniors will give you an appropriate answer.

I wish you all the best.

Dear koshish1971,

The meal pass is issued as per the guidelines of the income tax laws. They are exempt from income tax. Cash in lieu of these first will attract income tax. I don't think cash in lieu of the meal pass is allowed. However, the company can provide cash benefits like canteen subsidy, meal charges, etc., but all these will be taxed by the government (finance department).

Regarding your question about the attraction of PF, in the PF act, there is a definition of salary that includes any meal concession given to the employee. However, in practice, none of the companies are following this. I doubt many are aware of this.

As per my knowledge, I have given my opinion.

Thanks,
Dr. Nagaraj

In the CTC system, the employee can opt for Sodexo/Accor meal coupons to avail of tax exemption. If they do not opt for food coupons, it will be treated as taxable income. To address your query, Sodexo or any other meal passes are not compulsory; it is the employee's choice.

Regards,
R. Ponraj

If an employee requests a cash benefit in lieu of Sodexo, this would be considered part of taxable income and would attract tax. However, the cash benefit will not attract PF contribution as it is not a part of the basic salary.

Thanks & Regards,
Krishnamoorthy D

Please note, this is not a meal concession. Moreover, this act is more applicable in factories and to all those whose basic salary is less than Rs. 6500/- as they are covered under the included PF category and normally they don't receive these kinds of coupons. Hope this clarifies.

You can simply have Sodexo meal pass as an option for employees in their monthly salary component, similar to a lunch allowance. Whoever wants to opt for this benefit as Sodexo meal coupons can avail the tax benefit, and the rest can receive it along with their monthly salary as cash so that they will be taxed as per laws.

PF is calculated on Basic + DA, so there won't be any impact on PF.