A PIL is being filed to avoid tax evasion through Meal Coupons. Has anyone received Income Tax notice for audit of Sodexo coupons?
Following is the email send to IT Department and charges raised in PIL:
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Dear Sir/Madam,
This is with reference to Meal Allowance paid through salary to employees in India.
Meal allowance in salary is tax exempt component and therefore many companies give food coupon to employees. Ideally it is to be used for ready to eat food and for meal taken in office (or nearby office within working time).
However, the coupons are grossly misused to create parallel currency.
· The coupons are redeemed without signature of the beneficiary. Thus, the usage becomes untraceable. And some vendors rotate/exchange the coupons as parallel currency. Is this legal? If not, why IT Department is silent on this?
· How can grocery stores and malls accept such coupons if the allowance is for ready to eat Meal? Isn’t this illegal to claim tax benefit for shopping groceries?
· How can the coupons be redeemed in bulk? The exemption is for Rs 50 spent every day on meal.
Income tax department must issue notice to such food coupon vendors (Sodexo, Ticket Restaurants) to explicitly make these points clear to their customers. Also the redeemed coupons should be checked randomly to confirm signature at the back of the coupon. Companies should also be mandated to record the use of coupons since they claim income tax exemption for their employees on the basis of these coupons.
Millions of employees and their employers grossly misuse the benefit of Meal Allowance to avoid tax. IT Department is requested to act and stop this tax fraud.
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From India, Mumbai
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1Following is the email send to IT Department and charges raised in PIL:
-----------------------------
Dear Sir/Madam,
This is with reference to Meal Allowance paid through salary to employees in India.
Meal allowance in salary is tax exempt component and therefore many companies give food coupon to employees. Ideally it is to be used for ready to eat food and for meal taken in office (or nearby office within working time).
However, the coupons are grossly misused to create parallel currency.
· The coupons are redeemed without signature of the beneficiary. Thus, the usage becomes untraceable. And some vendors rotate/exchange the coupons as parallel currency. Is this legal? If not, why IT Department is silent on this?
· How can grocery stores and malls accept such coupons if the allowance is for ready to eat Meal? Isn’t this illegal to claim tax benefit for shopping groceries?
· How can the coupons be redeemed in bulk? The exemption is for Rs 50 spent every day on meal.
Income tax department must issue notice to such food coupon vendors (Sodexo, Ticket Restaurants) to explicitly make these points clear to their customers. Also the redeemed coupons should be checked randomly to confirm signature at the back of the coupon. Companies should also be mandated to record the use of coupons since they claim income tax exemption for their employees on the basis of these coupons.
Millions of employees and their employers grossly misuse the benefit of Meal Allowance to avoid tax. IT Department is requested to act and stop this tax fraud.
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From India, Mumbai
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Hollowed PIL. I can use meal allowance to buy groceries to prepare meal at home. What is wrong? Allowances can be used for the family expenses. Pon
From India, Lucknow
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From India, Lucknow
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Hi PON,
That's exactly the objection taken in the email. The meal allowance is tax-exempt since it is used for buying food when you attend the office at a rate of Rs 50 per meal. So buying groceries is a violation of income tax. However, I think the IT Department will hold the employer responsible for this since the employer gives the coupons in bulk to employees.
Another violation is Meal Allowance given for days when the employee is on leave. If an employee is on leave, the meal allowance should be made taxable for those days. But many companies do not follow this. So such employers are liable for action by the IT department.
Regards,
Pranav
From India, Pune
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That's exactly the objection taken in the email. The meal allowance is tax-exempt since it is used for buying food when you attend the office at a rate of Rs 50 per meal. So buying groceries is a violation of income tax. However, I think the IT Department will hold the employer responsible for this since the employer gives the coupons in bulk to employees.
Another violation is Meal Allowance given for days when the employee is on leave. If an employee is on leave, the meal allowance should be made taxable for those days. But many companies do not follow this. So such employers are liable for action by the IT department.
Regards,
Pranav
From India, Pune
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Hi Pranav,
Do you think IT authorities are not aware of the usage of food coupons? After all, food coupons are converted into food only. If food coupons are taxable, what about gift vouchers up to 5000/- which are exempt from tax? Why should you expect tax concession for conveyance allowance? Why should you expect tax concession for a housing loan for the house built for you and your family? Why should you expect a tax exemption for health club fees? There are more tax-saving components, and the FM and IT dept must have taken all factors into account before deciding the tax applicability on various components of income.
Pon
From India, Lucknow
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Do you think IT authorities are not aware of the usage of food coupons? After all, food coupons are converted into food only. If food coupons are taxable, what about gift vouchers up to 5000/- which are exempt from tax? Why should you expect tax concession for conveyance allowance? Why should you expect tax concession for a housing loan for the house built for you and your family? Why should you expect a tax exemption for health club fees? There are more tax-saving components, and the FM and IT dept must have taken all factors into account before deciding the tax applicability on various components of income.
Pon
From India, Lucknow
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Hi Pon,
All other allowances like Conveyance, Home Loan, etc., are used as per Income Tax guidelines. However, Sodexo is not utilized according to the guidelines and that is easily traceable. For example, Conveyance is Rs 800 per month and does not require any proof or precondition. LTA is offered as per guidelines (once in 2 years, etc.), and even if employees submit fake bills, the employer will not be in trouble.
On the contrary, Meal Allowance is payable only for days present in the office at a rate of Rs 50 per meal. The expectation may not seem reasonable, but that is what the law states. So companies can face trouble if this is audited by the IT Department.
I received an NC in internal audit since the auditors discovered that we didn't deduct the Sodexo amount for employees who were on leave in a particular month.
Regards,
Laxmi
From India, Mumbai
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All other allowances like Conveyance, Home Loan, etc., are used as per Income Tax guidelines. However, Sodexo is not utilized according to the guidelines and that is easily traceable. For example, Conveyance is Rs 800 per month and does not require any proof or precondition. LTA is offered as per guidelines (once in 2 years, etc.), and even if employees submit fake bills, the employer will not be in trouble.
On the contrary, Meal Allowance is payable only for days present in the office at a rate of Rs 50 per meal. The expectation may not seem reasonable, but that is what the law states. So companies can face trouble if this is audited by the IT Department.
I received an NC in internal audit since the auditors discovered that we didn't deduct the Sodexo amount for employees who were on leave in a particular month.
Regards,
Laxmi
From India, Mumbai
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Hi Laxmi,
In case of loss of pay (LOP) only, such deductions arise. Otherwise, no allowance is deductible, and leaves are adjusted from the earned leaves. Sodexo coupons are fully authentic and permitted by the IT Department. How can they transact in such volume without the approval of regulatory bodies? In many organizations, food coupons are part of the Cost to Company (CTC).
Pon
From India, Lucknow
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In case of loss of pay (LOP) only, such deductions arise. Otherwise, no allowance is deductible, and leaves are adjusted from the earned leaves. Sodexo coupons are fully authentic and permitted by the IT Department. How can they transact in such volume without the approval of regulatory bodies? In many organizations, food coupons are part of the Cost to Company (CTC).
Pon
From India, Lucknow
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All allowances are paid as per salary payment and they get prorated for LOP. However, the text of Meal Allowance clearly says it's for days present in the office. So even Earned Leaves do not qualify for tax exemption on the meal allowance.
Conveyance is for a month/LTA is for a year, so it does not matter if the person is absent for a few days. However, Meal Allowance is a daily allowance and therefore it is expected that Meal Allowance is not paid for leave days. Many companies have started following this by recording swipes and then multiplying it by Rs 50 a day for tax-exempt meal allowance.
However, companies offering Sodexo/Ticket Coupons do not deduct coupons for leaves. Ideally, the coupon value for leave days should become taxable.
From India, Mumbai
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Conveyance is for a month/LTA is for a year, so it does not matter if the person is absent for a few days. However, Meal Allowance is a daily allowance and therefore it is expected that Meal Allowance is not paid for leave days. Many companies have started following this by recording swipes and then multiplying it by Rs 50 a day for tax-exempt meal allowance.
However, companies offering Sodexo/Ticket Coupons do not deduct coupons for leaves. Ideally, the coupon value for leave days should become taxable.
From India, Mumbai
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When I was working at NSEiT in Mumbai way back in 2004, they had a nice system to handle this. At the beginning of every month, they used to give us coupons corresponding to the number of working days in the month (50 per meal * 2 meals per day * number of working days) and they used to subtract the number of leaves taken in the last month from the same.
At that time, I used to wonder why they did such complex calculations when our friends in other companies used to get a fixed amount. Later, I realized that the Income Tax rules clearly specify that the benefit is limited to the actual number of meals had by the employee at the workplace * Rs.50/- for each meal. No doubt NSEiT, being one of the consultants for the IT department, wanted to keep their slate clean.
From India, Bangalore
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At that time, I used to wonder why they did such complex calculations when our friends in other companies used to get a fixed amount. Later, I realized that the Income Tax rules clearly specify that the benefit is limited to the actual number of meals had by the employee at the workplace * Rs.50/- for each meal. No doubt NSEiT, being one of the consultants for the IT department, wanted to keep their slate clean.
From India, Bangalore
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And by the way, this PIL is heading in the right direction because companies randomly give coupon booklets to their employees with scant respect for IT rules. I know some companies that provide food coupons worth $3000. This is blatant misuse of the benefit.
From India, Bangalore
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From India, Bangalore
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Assuming 25 working days and Rs.50 per day meal allowance allowed, it is presumed that Rs.1250 coupons issued by the Company to an employee, who has not taken any leave, are tax-free/legal. Am I right?
From India, Mumbai
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From India, Mumbai
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Hi Abhay,
The working days depend on the Shops and Establishment document/Standing Orders where the company would have specified the working days. Manufacturing companies can give Rs. 1250 since they have a 6-day week. IT companies have a 5-day week so they can give 22 x 50 = Rs. 1100.
Regards,
Pranav
From India, Mumbai
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The working days depend on the Shops and Establishment document/Standing Orders where the company would have specified the working days. Manufacturing companies can give Rs. 1250 since they have a 6-day week. IT companies have a 5-day week so they can give 22 x 50 = Rs. 1100.
Regards,
Pranav
From India, Mumbai
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Companies giving Rs 3000 can be easily punished. If an employee claims three meals in the office, that means the employee has worked overtime (worked in two consecutive shifts). So, has the company paid overtime to all such employees who get Rs 3000 Sodexo? :)
From India, Mumbai
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From India, Mumbai
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At the very outset, let me clarify that I am not a tax person, or my knowledge is very poor about taxation.
If the payments of Rs. 3000/- per month are for the current year, I think the question of punishment does not arise. What companies can do, whatever excess payment is done than the eligibility, i.e. more payment than Rs. 1100/1250, they have to consider these amounts as taxable income. Of course, they have to intimate employees accordingly, prior to any deduction of tax.
If the amounts relate to coupons issued in the previous year, I feel they can still make deductions of tax wherever applicable, and remit to authorities, with some penalties.
P.S. Since Sodexo coupons, etc., are operative for more than the past 10 years, I have strong doubts about the tax implications. There are huge chances that these companies have appropriate approvals from the IT dept for the issuance of coupons, and accordingly they must be convincing their customers, proving all legalities.
I shall make more inquiries into this and will update shortly since I know a few friends who get such kind of coupons from their employers.
From India, Mumbai
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If the payments of Rs. 3000/- per month are for the current year, I think the question of punishment does not arise. What companies can do, whatever excess payment is done than the eligibility, i.e. more payment than Rs. 1100/1250, they have to consider these amounts as taxable income. Of course, they have to intimate employees accordingly, prior to any deduction of tax.
If the amounts relate to coupons issued in the previous year, I feel they can still make deductions of tax wherever applicable, and remit to authorities, with some penalties.
P.S. Since Sodexo coupons, etc., are operative for more than the past 10 years, I have strong doubts about the tax implications. There are huge chances that these companies have appropriate approvals from the IT dept for the issuance of coupons, and accordingly they must be convincing their customers, proving all legalities.
I shall make more inquiries into this and will update shortly since I know a few friends who get such kind of coupons from their employers.
From India, Mumbai
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Hi Guys,
All you guys seem to put so much emphasis on right and wrong, in terms of meal allowance being taxable or not and that it should be INR 50.00 a day, and a whole lot of other jargons related to IT dept. and what they consider and how they consider. However we forget to take note that, except in maybe one or two cities, in which IT/ITES/BPO sector (location) can you find a meal (a whole decent lunch) for Rs. 50.00. As per some wisecrack sitting somewhere high up the bureaucratic ladder, anybody earning more than Rs.45 a day is not considered to be BPL, (Below Poverty Line). I know scores of people who may earn 5 times that amount and yet, life isn't exactly easy for them, I'm sure a lot of us will relate to that. My point being, at least our companies (mnc's) we work for understand and payout extra so you can have that THALI costing Rs. 150.00, (or eat egg maggi in Rs. 50.00) then why are we spoiling a perfectly good thing. In a country that is governed by people, who leave you needing more throughout our middle class lives, why are we having a problem with something, that for once is working out to our advantage. (don’t take me otherwise guys, it’s just an opinion )
Thanks & Regards
Jintan Dinesh
From India, Kolkata
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All you guys seem to put so much emphasis on right and wrong, in terms of meal allowance being taxable or not and that it should be INR 50.00 a day, and a whole lot of other jargons related to IT dept. and what they consider and how they consider. However we forget to take note that, except in maybe one or two cities, in which IT/ITES/BPO sector (location) can you find a meal (a whole decent lunch) for Rs. 50.00. As per some wisecrack sitting somewhere high up the bureaucratic ladder, anybody earning more than Rs.45 a day is not considered to be BPL, (Below Poverty Line). I know scores of people who may earn 5 times that amount and yet, life isn't exactly easy for them, I'm sure a lot of us will relate to that. My point being, at least our companies (mnc's) we work for understand and payout extra so you can have that THALI costing Rs. 150.00, (or eat egg maggi in Rs. 50.00) then why are we spoiling a perfectly good thing. In a country that is governed by people, who leave you needing more throughout our middle class lives, why are we having a problem with something, that for once is working out to our advantage. (don’t take me otherwise guys, it’s just an opinion )
Thanks & Regards
Jintan Dinesh
From India, Kolkata
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Meal allowance exempt under the income tax was specifically for meals at the office or during work hours on official work. Any other allowance would be taxable. When FBT was introduced, these coupons were made taxable. Then the change was made (after the 2 major coupon companies paid huge bribes to the finance ministry) they added such coupons to the meals. In reality and under existing law, the use of these coupons at any place other than for food at the workplace is taxable, and the income tax department can take action. I think the PIL will have a major impact on many companies and on these 2 coupon companies in specific.
From India, Mumbai
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From India, Mumbai
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Dear friends,
In these days of ready-to-eat meals, which require just warming or heating; as well as ready-to-eat snacks, including biscuits, fruits, and fried wafers, available in grocery stores; one can buy these with the Sodexo coupons and eat. There are no regulations on what constitutes a meal. Packed foods by ITC or MTR just need to be warmed to be eaten.
An employee can take credit for days and pay the outstanding in bulk on a day with coupons. Where is the illegality in it? It is surprising that in the days of multi-crore scams taking place every week with alarming irregularity, such peanuts of payments for actual consumption by the common man are being examined so thoroughly! Instead of getting alarmed or agreeing with such insinuations against the hard-working, tax-paying working class, it was expected that people would stand up for their rights and perquisites, rather than succumbing meekly to pressure.
Warm regards.
From India, Delhi
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In these days of ready-to-eat meals, which require just warming or heating; as well as ready-to-eat snacks, including biscuits, fruits, and fried wafers, available in grocery stores; one can buy these with the Sodexo coupons and eat. There are no regulations on what constitutes a meal. Packed foods by ITC or MTR just need to be warmed to be eaten.
An employee can take credit for days and pay the outstanding in bulk on a day with coupons. Where is the illegality in it? It is surprising that in the days of multi-crore scams taking place every week with alarming irregularity, such peanuts of payments for actual consumption by the common man are being examined so thoroughly! Instead of getting alarmed or agreeing with such insinuations against the hard-working, tax-paying working class, it was expected that people would stand up for their rights and perquisites, rather than succumbing meekly to pressure.
Warm regards.
From India, Delhi
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Taj,
Believe me, these are not small amounts. The amount of tax evasion is very high. It could make the politicians blush with shame at missed opportunity. Most large retailers also want this stopped, and they have some very valid reasons.
From India, Mumbai
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Believe me, these are not small amounts. The amount of tax evasion is very high. It could make the politicians blush with shame at missed opportunity. Most large retailers also want this stopped, and they have some very valid reasons.
From India, Mumbai
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In fact, the large retailers are in favor of Sodexo coupons as it adds considerably to their top and bottom lines. I have ascertained this from Big Bazaar, EasyDay, More, and Reliance Stores. Big Bazaar has already opened a few food counters that serve food items just to comply with IT regulations.
Salaried people are the only class (unlike other professionals like consultants who can accept black money or enable others to make white money) who cannot escape their tax liabilities. Tax evasion is minimal, if any, because every family buys and consumes food items (even if a person brings food from home and does not spend the coupon every day). Invariably, it is used for buying food items in stores.
Believe me, the paltry tax-free amount of Rs. 1250 for a month cannot buy foodstuffs even for a single-person family for a month! So, how can a common salaried person evade a huge amount of money?
In any case, these coupons are not hoarded but invariably used in grocery stores. Only politicians, who are far away from the stark realities of life (like onions and tomatoes available at Rs. 80 per kg, average good rice at Rs. 60/kg, potatoes at 30/kg, etc.) and are used to figures of crores of rupees, can claim something of this nature!
In fact, it is high time that the salaried class demands that this amount, which has remained the same for quite a few years, be enhanced to at least 3 times, in view of the rising prices of consumables.
From India, Delhi
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Salaried people are the only class (unlike other professionals like consultants who can accept black money or enable others to make white money) who cannot escape their tax liabilities. Tax evasion is minimal, if any, because every family buys and consumes food items (even if a person brings food from home and does not spend the coupon every day). Invariably, it is used for buying food items in stores.
Believe me, the paltry tax-free amount of Rs. 1250 for a month cannot buy foodstuffs even for a single-person family for a month! So, how can a common salaried person evade a huge amount of money?
In any case, these coupons are not hoarded but invariably used in grocery stores. Only politicians, who are far away from the stark realities of life (like onions and tomatoes available at Rs. 80 per kg, average good rice at Rs. 60/kg, potatoes at 30/kg, etc.) and are used to figures of crores of rupees, can claim something of this nature!
In fact, it is high time that the salaried class demands that this amount, which has remained the same for quite a few years, be enhanced to at least 3 times, in view of the rising prices of consumables.
From India, Delhi
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Having used Sodexo coupons myself, I was wondering if it helps me or hurts me...
I am unaware of the legality terms, but here are some observations I have made:
1. Sodexo coupons are accepted at restaurants and malls to purchase ready meals, packed food, or cooked food.
2. Some retailers charge extra to accept Sodexo, or they do not accept Sodexo at all because they have to spend extra money from their pocket. (This concept is similar to some retailers charging you extra when you pay by swiping your credit/debit cards).
3. The logical concept is that a meal of 50 Rs is not taxed and is paid on a daily basis. Therefore, we are supposed to give 50*2 = 100 Rs a day for meal allowance. Now, if a person brings a tiffin on a particular day, should we say that he is not eligible for a meal allowance?
4. Today, he wanted to have something special which he can't buy for 50 Rs. So, he used his meal voucher for the day he brought his tiffin. What's illegal about this?
5. I am not sure if there are companies that provide Sodexo coupons worth 3000 per month. I know of some firms that offer 1250 as food allowance, partly as cash and partly as Sodexo or the entire amount as Sodexo.
6. I agree that meal allowance is stated to be given for the days when the person is on duty - either in the office or outside. However, as someone rightly pointed out, if a person is in the field and cannot have a proper meal for 50 Rs as per IT regulations, how should he be compensated?
From India, Mumbai
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I am unaware of the legality terms, but here are some observations I have made:
1. Sodexo coupons are accepted at restaurants and malls to purchase ready meals, packed food, or cooked food.
2. Some retailers charge extra to accept Sodexo, or they do not accept Sodexo at all because they have to spend extra money from their pocket. (This concept is similar to some retailers charging you extra when you pay by swiping your credit/debit cards).
3. The logical concept is that a meal of 50 Rs is not taxed and is paid on a daily basis. Therefore, we are supposed to give 50*2 = 100 Rs a day for meal allowance. Now, if a person brings a tiffin on a particular day, should we say that he is not eligible for a meal allowance?
4. Today, he wanted to have something special which he can't buy for 50 Rs. So, he used his meal voucher for the day he brought his tiffin. What's illegal about this?
5. I am not sure if there are companies that provide Sodexo coupons worth 3000 per month. I know of some firms that offer 1250 as food allowance, partly as cash and partly as Sodexo or the entire amount as Sodexo.
6. I agree that meal allowance is stated to be given for the days when the person is on duty - either in the office or outside. However, as someone rightly pointed out, if a person is in the field and cannot have a proper meal for 50 Rs as per IT regulations, how should he be compensated?
From India, Mumbai
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There is a reason why Sodexo and tickets are not accepted by restaurants.
These are: high rate of commission charged (banks charge 1.5% for credit cards, Sodexo is charging 2.5% to 7.5%)
Delay in settling: minimum 45 days
Major Reconciliation Problems
Disputes relating to the authenticity of claims
High level of frauds due to duplicate/fake Sodexo coupons.
Unlike what our senior members just wrote, retailers like Big Bazaar and Reliance Fresh are not accepting these coupons happily. They are being coerced into accepting the same since they are losing out on sales (in a very competitive market). Most of them have realized that accepting the coupons is a direct loss as the discounts given are at times more than margins on the sale. However, they are considering it as a loss leader. And are happy that their management has no way to measure whether the loss leader is resulting in profits in other areas.
As for the rest of your query, the income tax department will not come after you personally. So it does not matter whether you are using the Sodexo coupons for buying clothes or for lunch. Since it's an allowance, it is to be given irrespective of whether the person is using it or not. It's like a conveyance allowance of Rs. 800 per month tax-free under the income tax laws, which is paid irrespective of whether you come to the office or not.
The income tax law has nothing that prevents you from reimbursing the cost of meals that are allowed under your own rules (earlier there was FBT, which has been removed). What is limited is the Food Allowance (which is a tax-free perquisite). I hope you understand the difference between the reimbursement of expenses incurred in connection with work and the allowance paid/payable.
Having used Sodexo coupons myself, I was wondering if it helps me or hurts me...
I am unaware of the legality terms, but things that I have noticed -
1. Sodexo coupons are accepted at restaurants and at malls to buy ready meals/packed food/cooked food.
2. Few retailers charge extra to accept Sodexo or they don't accept Sodexo at all because they have to shed a few extra bucks from their pocket. (The concept is similar to few retailers charging you extra when you pay by swiping your credit/debit cards).
3. Though the logical concept is that a meal of 50 is not taxed and is paid on a daily basis, so we are to give 50*2 = 100 Rs a day for a meal allowance. Now, if the person on a said day brings a tiffin, should we say that he is not eligible for a meal allowance?
4. Today he wanted to have something special which he can't buy for 50 Rs. so he adjusted his meal voucher for the day he brought a tiffin, what's illegal in this?
5. I am unaware if there are companies that give Sodexo coupons worth 3000 pm, I have known a few firms giving 1250 as a food allowance, partly as cash and partly as Sodexo or the whole amount as Sodexo.
6. I will agree with the fact that the meal allowance is mentioned to be given for the days when the person is on duty - either in the office or outside... However, as someone rightly mentioned, if the person is on the field and is unable to have a proper meal in 50 Rs as prescribed by the IT regulations, how to compensate him?
From India, Mumbai
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These are: high rate of commission charged (banks charge 1.5% for credit cards, Sodexo is charging 2.5% to 7.5%)
Delay in settling: minimum 45 days
Major Reconciliation Problems
Disputes relating to the authenticity of claims
High level of frauds due to duplicate/fake Sodexo coupons.
Unlike what our senior members just wrote, retailers like Big Bazaar and Reliance Fresh are not accepting these coupons happily. They are being coerced into accepting the same since they are losing out on sales (in a very competitive market). Most of them have realized that accepting the coupons is a direct loss as the discounts given are at times more than margins on the sale. However, they are considering it as a loss leader. And are happy that their management has no way to measure whether the loss leader is resulting in profits in other areas.
As for the rest of your query, the income tax department will not come after you personally. So it does not matter whether you are using the Sodexo coupons for buying clothes or for lunch. Since it's an allowance, it is to be given irrespective of whether the person is using it or not. It's like a conveyance allowance of Rs. 800 per month tax-free under the income tax laws, which is paid irrespective of whether you come to the office or not.
The income tax law has nothing that prevents you from reimbursing the cost of meals that are allowed under your own rules (earlier there was FBT, which has been removed). What is limited is the Food Allowance (which is a tax-free perquisite). I hope you understand the difference between the reimbursement of expenses incurred in connection with work and the allowance paid/payable.
Having used Sodexo coupons myself, I was wondering if it helps me or hurts me...
I am unaware of the legality terms, but things that I have noticed -
1. Sodexo coupons are accepted at restaurants and at malls to buy ready meals/packed food/cooked food.
2. Few retailers charge extra to accept Sodexo or they don't accept Sodexo at all because they have to shed a few extra bucks from their pocket. (The concept is similar to few retailers charging you extra when you pay by swiping your credit/debit cards).
3. Though the logical concept is that a meal of 50 is not taxed and is paid on a daily basis, so we are to give 50*2 = 100 Rs a day for a meal allowance. Now, if the person on a said day brings a tiffin, should we say that he is not eligible for a meal allowance?
4. Today he wanted to have something special which he can't buy for 50 Rs. so he adjusted his meal voucher for the day he brought a tiffin, what's illegal in this?
5. I am unaware if there are companies that give Sodexo coupons worth 3000 pm, I have known a few firms giving 1250 as a food allowance, partly as cash and partly as Sodexo or the whole amount as Sodexo.
6. I will agree with the fact that the meal allowance is mentioned to be given for the days when the person is on duty - either in the office or outside... However, as someone rightly mentioned, if the person is on the field and is unable to have a proper meal in 50 Rs as prescribed by the IT regulations, how to compensate him?
From India, Mumbai
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Yes,
The concerns are understood...
However, the PIL (language) seems to be blaming the customers / shoppers who pay sodexo coupons to buy whatever at groceries or wherever...
If the thing is that these outlets are in a way or other forced by such meal vouchers company, there should be a case against them...
Secondly,
as an employee as well as the HR, my argument is -
1. We would always prefer giving away cash to employees as meal allowance (whatever the prescribed limit)
2. We give sodexo or other similar coupons because they are being promoted as a tax free item
3. While doing a study research last year while I was in a need to understand this Meal Allowance, I came across few links that mentioned, if we give cash as meal allowance, we attract tax beyond prescribed limit however meal vouchers like sodexo coupons are tax free to the whole amount given as meal allowance....
[Example -
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.
attribution https://www.citehr.com/136089-sodexh...#ixzz2l4pz4nu9
Can be encashed by anyone and for purchase of groceries too.
attribution https://www.citehr.com/97630-sodexho...ixzz2l4v1H5qd]
In all these who is at fault and who will be paying a price for it?
The concern and the point that I want to make is only so much - When things are actually wrongly promoted by the company, there is not point in blaming employees. Such meal coupons vending companies do actually say we can use it anywhere (even to buy groceries) so ideally, as an employee / layman / I am not violating law as I trust the company who guided me before I opted for such meal coupons...
Again as you mention meal allowance is a concept similar to conveyance allowance - we get money for it irrespective of the fact that we use it or not for prescribed purpose. I may be staying next door of the firm I work for, yet I am eligible to get 800 as my conveyance. Similar way I should be getting my meal allowance. So if I am getting my meal allowance paid in cash, I would use this cash to buy flour and vegetables so that I can cook my tiffin. But if I get sodexo or alike coupons, I use them to buy packet items or similar stuffs so that I can pack my tiffin. How is this illegal? This is something I didn't understand.
The reason I am stretching on it is because that is how the PIL has been framed...
1.How can grocery stores and malls accept such coupons if the allowance is for ready to eat Meal? Isn’t this illegal to claim tax benefit for shopping groceries?
2. How can the coupons be redeemed in bulk? The exemption is for Rs 50 spent every day on meal. - I gave a scenario in my last post and hope it is reasonable enough to spend it in bulk then...
Again as you said,
there are many places where such food coupons are not accepted, we don't force them either.
There are many instances wherein our coupons are wasted because they're to expire and we don't have much on list to buy (we never get refund for those wasted coupons)
it's a 50-50 scenario for employees as well.... They may be able to take some advantage once in a while, but most months, there are many denominations that go wasted.... and about tax saving, the amount of tax saved by these employees will match anyway the amount wasted by such coupons.... [in the even sodexo / alike company was profitted, so we should instead have proper means to tax such companies)
From India, Mumbai
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The concerns are understood...
However, the PIL (language) seems to be blaming the customers / shoppers who pay sodexo coupons to buy whatever at groceries or wherever...
If the thing is that these outlets are in a way or other forced by such meal vouchers company, there should be a case against them...
Secondly,
as an employee as well as the HR, my argument is -
1. We would always prefer giving away cash to employees as meal allowance (whatever the prescribed limit)
2. We give sodexo or other similar coupons because they are being promoted as a tax free item
3. While doing a study research last year while I was in a need to understand this Meal Allowance, I came across few links that mentioned, if we give cash as meal allowance, we attract tax beyond prescribed limit however meal vouchers like sodexo coupons are tax free to the whole amount given as meal allowance....
[Example -
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.
attribution https://www.citehr.com/136089-sodexh...#ixzz2l4pz4nu9
Can be encashed by anyone and for purchase of groceries too.
attribution https://www.citehr.com/97630-sodexho...ixzz2l4v1H5qd]
In all these who is at fault and who will be paying a price for it?
The concern and the point that I want to make is only so much - When things are actually wrongly promoted by the company, there is not point in blaming employees. Such meal coupons vending companies do actually say we can use it anywhere (even to buy groceries) so ideally, as an employee / layman / I am not violating law as I trust the company who guided me before I opted for such meal coupons...
Again as you mention meal allowance is a concept similar to conveyance allowance - we get money for it irrespective of the fact that we use it or not for prescribed purpose. I may be staying next door of the firm I work for, yet I am eligible to get 800 as my conveyance. Similar way I should be getting my meal allowance. So if I am getting my meal allowance paid in cash, I would use this cash to buy flour and vegetables so that I can cook my tiffin. But if I get sodexo or alike coupons, I use them to buy packet items or similar stuffs so that I can pack my tiffin. How is this illegal? This is something I didn't understand.
The reason I am stretching on it is because that is how the PIL has been framed...
1.How can grocery stores and malls accept such coupons if the allowance is for ready to eat Meal? Isn’t this illegal to claim tax benefit for shopping groceries?
2. How can the coupons be redeemed in bulk? The exemption is for Rs 50 spent every day on meal. - I gave a scenario in my last post and hope it is reasonable enough to spend it in bulk then...
Again as you said,
there are many places where such food coupons are not accepted, we don't force them either.
There are many instances wherein our coupons are wasted because they're to expire and we don't have much on list to buy (we never get refund for those wasted coupons)
it's a 50-50 scenario for employees as well.... They may be able to take some advantage once in a while, but most months, there are many denominations that go wasted.... and about tax saving, the amount of tax saved by these employees will match anyway the amount wasted by such coupons.... [in the even sodexo / alike company was profitted, so we should instead have proper means to tax such companies)
From India, Mumbai
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Ankita,
You have hit the nail on the head.
When FBT was in force, the coupons made sense as it was saving FBT
Now, it does not have any value as such.
The only thing is that :
a. Most HR / Finance departments in large companies have not bothered to review the matter and inertia is continuing.
b. Its done in other countries abroad so its done here by MNCs without realising whether its efficient in india
c. Accor and sodexo stress the tax free status without telling that even if they were to give the money as reimbursement the matter would be same for the company.
I have not read the PIL so dont know the wording.
However, there was no logic to granting special status to these coupons except that there was probably large amount of money paid to the minister to allow it to happen.
From India, Mumbai
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You have hit the nail on the head.
When FBT was in force, the coupons made sense as it was saving FBT
Now, it does not have any value as such.
The only thing is that :
a. Most HR / Finance departments in large companies have not bothered to review the matter and inertia is continuing.
b. Its done in other countries abroad so its done here by MNCs without realising whether its efficient in india
c. Accor and sodexo stress the tax free status without telling that even if they were to give the money as reimbursement the matter would be same for the company.
I have not read the PIL so dont know the wording.
However, there was no logic to granting special status to these coupons except that there was probably large amount of money paid to the minister to allow it to happen.
From India, Mumbai
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I appreciate and echo the sentiments expressed by Ankita.
Salaried employees, as a class, deserve more leniency and tax breaks, as they cannot escape or evade taxes. They are the ones who diligently pay (or are required to pay) Income Tax every month even before it is due to be paid as Advance Tax by other categories of taxpayers. Although there is no escape from Income Tax, at least they should be made to feel proud as honest tax-paying citizens of the country, instead of false aspersions being cast upon them for doubtful notional evasion of taxes.
Warm regards.
From India, Delhi
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Salaried employees, as a class, deserve more leniency and tax breaks, as they cannot escape or evade taxes. They are the ones who diligently pay (or are required to pay) Income Tax every month even before it is due to be paid as Advance Tax by other categories of taxpayers. Although there is no escape from Income Tax, at least they should be made to feel proud as honest tax-paying citizens of the country, instead of false aspersions being cast upon them for doubtful notional evasion of taxes.
Warm regards.
From India, Delhi
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"I think you are psycho guys, in Kejri language you are a psychopath."
"What I want to say, you are just a bullshit guy who has that much free time."
Language not appreciated. You are in a professional forum, whatever be the merits and demerits of your argument - courteous language is of prime necessity.
From India, Pune
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"What I want to say, you are just a bullshit guy who has that much free time."
Language not appreciated. You are in a professional forum, whatever be the merits and demerits of your argument - courteous language is of prime necessity.
From India, Pune
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My quick 2 cents:
1. Please interpret the law carefully. The law says Rs 50 per meal and not Rs 50 per day. It does not define a meal. As per the honorable Supreme Court, if the definition is not specified in the law, leading dictionaries can be consulted. It also includes Tea and snacks in the law. A snack is also defined as a light meal. There is absolutely no harm in taking 2 meals or even 2 and a half meals per day. Rs 50 for breakfast, Rs 50 for lunch, and Rs 25-35 for tea or snack.
2. The law talks about working hours, not normal working hours. Working hours do not necessarily mean an employee has to sit in the office. IT company employees even work from home or work on Sundays. All this is considered as working hours. Overtime is also considered as working hours. The per day allowance can be decided based on all these factors.
3. A valid point made by PON. The grocery is bought to prepare meals to be consumed during office hours.
4. It is the obligation of a retail store to ensure that coupons are only redeemed against food or non-alcoholic beverages. The employee is under no obligation if the retail store is flouting the rules. All national chains like Big Bazaar, Spar, Hypercity, Reliance Fresh, More, Spencer's, etc., accept only for food and non-alcoholic beverages.
5. To put on a public forum that 2 Food coupon companies bribed the IT department is grossly misjudged. Do you have any proof? Because this can go against you?
6. Like conveyance, even Sodexo coupons are tax-free without having to submit any proofs. In fact, it is the only instrument that allows you to save some tax even if you have not made any investments. Because this is a part of CTC.
7. Please get a life if you don't like Sodexo coupons. Lakhs of employees are benefiting from this.
8. If any outlet is overcharging for accepting Sodexo coupons, please bring it to Sodexo's notice. They shall immediately blacklist the outlet. It has zero tolerance towards this. Not a single extra penny has to be given over and above the bill value when paid by Sodexo coupons.
Cheers!!
From India, Bangalore
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1. Please interpret the law carefully. The law says Rs 50 per meal and not Rs 50 per day. It does not define a meal. As per the honorable Supreme Court, if the definition is not specified in the law, leading dictionaries can be consulted. It also includes Tea and snacks in the law. A snack is also defined as a light meal. There is absolutely no harm in taking 2 meals or even 2 and a half meals per day. Rs 50 for breakfast, Rs 50 for lunch, and Rs 25-35 for tea or snack.
2. The law talks about working hours, not normal working hours. Working hours do not necessarily mean an employee has to sit in the office. IT company employees even work from home or work on Sundays. All this is considered as working hours. Overtime is also considered as working hours. The per day allowance can be decided based on all these factors.
3. A valid point made by PON. The grocery is bought to prepare meals to be consumed during office hours.
4. It is the obligation of a retail store to ensure that coupons are only redeemed against food or non-alcoholic beverages. The employee is under no obligation if the retail store is flouting the rules. All national chains like Big Bazaar, Spar, Hypercity, Reliance Fresh, More, Spencer's, etc., accept only for food and non-alcoholic beverages.
5. To put on a public forum that 2 Food coupon companies bribed the IT department is grossly misjudged. Do you have any proof? Because this can go against you?
6. Like conveyance, even Sodexo coupons are tax-free without having to submit any proofs. In fact, it is the only instrument that allows you to save some tax even if you have not made any investments. Because this is a part of CTC.
7. Please get a life if you don't like Sodexo coupons. Lakhs of employees are benefiting from this.
8. If any outlet is overcharging for accepting Sodexo coupons, please bring it to Sodexo's notice. They shall immediately blacklist the outlet. It has zero tolerance towards this. Not a single extra penny has to be given over and above the bill value when paid by Sodexo coupons.
Cheers!!
From India, Bangalore
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Quick points.
1. The law says Rs 50 per meal. It does not say Rs 50 per day. It used to be Rs 35 per day until 2001. Then it was changed because for 10-12 hours of work, one meal is not sufficient. Does the law specify how many meals? If you work from 9-6 in a general shift and add travel time from home to office and back, you are away from home for almost 10-12 hours. One meal does not suffice; hence, companies provide two meals. If your company policy includes tea or snacks, you can still offer an additional Rs 25 or Rs 35 worth of coupons. In total, you can always provide Rs 100-150 per day. The law needs careful interpretation. Did you know that in the UK, even travel time from home to office and back has been added to working hours? A similar petition is in progress in India.
2. The law mentions working hours. It does not specify or define working hours. Working hours should not be confused with office timings. Nowadays, we often take our laptops home and may engage with onsite clients even at midnight or prepare presentations on a Sunday for a Monday meeting. These activities constitute working hours. I emphasize the importance of interpreting the law correctly.
3. Even in grocery stores or hypermarkets, you can find ready-to-eat food. Additionally, many employees either have health issues or prefer not to eat out. They purchase grains and vegetables using coupons, prepare meals at home, bring them to the office, and consume them during the so-called working hours. In this context, how are they wrong? How can they be proven wrong?
Regards,
Rahul
From India, Bangalore
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1. The law says Rs 50 per meal. It does not say Rs 50 per day. It used to be Rs 35 per day until 2001. Then it was changed because for 10-12 hours of work, one meal is not sufficient. Does the law specify how many meals? If you work from 9-6 in a general shift and add travel time from home to office and back, you are away from home for almost 10-12 hours. One meal does not suffice; hence, companies provide two meals. If your company policy includes tea or snacks, you can still offer an additional Rs 25 or Rs 35 worth of coupons. In total, you can always provide Rs 100-150 per day. The law needs careful interpretation. Did you know that in the UK, even travel time from home to office and back has been added to working hours? A similar petition is in progress in India.
2. The law mentions working hours. It does not specify or define working hours. Working hours should not be confused with office timings. Nowadays, we often take our laptops home and may engage with onsite clients even at midnight or prepare presentations on a Sunday for a Monday meeting. These activities constitute working hours. I emphasize the importance of interpreting the law correctly.
3. Even in grocery stores or hypermarkets, you can find ready-to-eat food. Additionally, many employees either have health issues or prefer not to eat out. They purchase grains and vegetables using coupons, prepare meals at home, bring them to the office, and consume them during the so-called working hours. In this context, how are they wrong? How can they be proven wrong?
Regards,
Rahul
From India, Bangalore
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