Dear Experts,
I am working with Baumuller India Pune, where we manufacture Motors, Drives, and PLCs. Approximately 55-60 employees of all types are currently working in our organization. I have a few questions and doubts related to the nominal canteen deduction from salaries, as follows:
Current Canteen Practices
Before delving further, let me provide you with an insight into the current canteen practices:
1. We have offered a canteen facility to each employee for the past 8 years without any deductions from their salaries.
2. The canteen services provided by the vendor are commendable in terms of taste, hygiene, and quantity.
3. The vendor caters to around 30 to 35 servings per day for our employees, with the rest bringing their meals from home. Additionally, they serve their own mess members, which is unrelated to our arrangement.
4. As a small business operator, the vendor only provides a monthly invoice without any GST bill.
5. The current canteen charges are Rs. 80 per person, and the vendor is proposing an increase to Rs. 90 per person, which the company is willing to cover.
6. Despite the employees undervaluing the canteen facility, the Canteen Committee has decided to impose nominal charges of Rs. 250 or Rs. 300 per month on all employees, regardless of whether they utilize the service. This charge includes two meals and tea/coffee twice a day.
Questions and Doubts
Now, with the above scenario in mind, I have the following doubts:
1. Is it permissible to levy these nominal charges on employees?
2. Can we display the canteen deduction on the salary slip?
3. In case the canteen deductions do not appear on the payslip, can we categorize them under other deductions? What would be the optimal approach for payslip representation?
4. Given that the vendor lacks a GSTIN or provides invoices with GST charges, can we, as a company, still impose or retrieve the canteen amount of Rs. 250 per month from the employees?
5. If we intend to recoup this sum, is it imperative for the vendor to possess a GST number and furnish invoices with GST charges?
I seek your assistance on this matter.
Regards, Archana Bapat
From India, Pune
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I am working with Baumuller India Pune, where we manufacture Motors, Drives, and PLCs. Approximately 55-60 employees of all types are currently working in our organization. I have a few questions and doubts related to the nominal canteen deduction from salaries, as follows:
Current Canteen Practices
Before delving further, let me provide you with an insight into the current canteen practices:
1. We have offered a canteen facility to each employee for the past 8 years without any deductions from their salaries.
2. The canteen services provided by the vendor are commendable in terms of taste, hygiene, and quantity.
3. The vendor caters to around 30 to 35 servings per day for our employees, with the rest bringing their meals from home. Additionally, they serve their own mess members, which is unrelated to our arrangement.
4. As a small business operator, the vendor only provides a monthly invoice without any GST bill.
5. The current canteen charges are Rs. 80 per person, and the vendor is proposing an increase to Rs. 90 per person, which the company is willing to cover.
6. Despite the employees undervaluing the canteen facility, the Canteen Committee has decided to impose nominal charges of Rs. 250 or Rs. 300 per month on all employees, regardless of whether they utilize the service. This charge includes two meals and tea/coffee twice a day.
Questions and Doubts
Now, with the above scenario in mind, I have the following doubts:
1. Is it permissible to levy these nominal charges on employees?
2. Can we display the canteen deduction on the salary slip?
3. In case the canteen deductions do not appear on the payslip, can we categorize them under other deductions? What would be the optimal approach for payslip representation?
4. Given that the vendor lacks a GSTIN or provides invoices with GST charges, can we, as a company, still impose or retrieve the canteen amount of Rs. 250 per month from the employees?
5. If we intend to recoup this sum, is it imperative for the vendor to possess a GST number and furnish invoices with GST charges?
I seek your assistance on this matter.
Regards, Archana Bapat
From India, Pune
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Implications of Changing Free Food Policy for Employees
The free food given to employees has become a customary benefit and one of the conditions of service. Therefore, changing it will require notice under Section 9A of the Industrial Disputes Act. It is a fact that due to cost increases, the vendor may not be able to supply food at the same price as before. Moreover, the amount of increase is reasonable as well as genuine. I don't know what the GST implication is, but I would say that the cost of food provided free of cost or at a concessional rate can be recovered from the wages of respective employees.
Notice Requirement for Policy Change
In your case, since a system of free food has been in place, you cannot make it a subsidized rate without giving notice (21 days prior to implementation) to the workers with a copy to the Labour Officer and Union, if any. If you do not have a Union, then you can call a meeting of the workers, take them into confidence, and make necessary changes in the food policy. It is always desirable to have a uniform system for all employees. When there are a few employees who are not taking food from the canteen, they may feel at a loss compared to those who regularly take free food from the canteen.
Addressing Disparity in Food Costs
If the cost of food is not included in the wages, there would be disparity. That can be remedied by adding the cost of food to the wages and then deducting a nominal amount from the wages of those who avail of food. The taxability of any free food, being a perquisite in the hands of the employee, may be discussed with your Chartered Accountant.
From India, Kannur
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4526The free food given to employees has become a customary benefit and one of the conditions of service. Therefore, changing it will require notice under Section 9A of the Industrial Disputes Act. It is a fact that due to cost increases, the vendor may not be able to supply food at the same price as before. Moreover, the amount of increase is reasonable as well as genuine. I don't know what the GST implication is, but I would say that the cost of food provided free of cost or at a concessional rate can be recovered from the wages of respective employees.
Notice Requirement for Policy Change
In your case, since a system of free food has been in place, you cannot make it a subsidized rate without giving notice (21 days prior to implementation) to the workers with a copy to the Labour Officer and Union, if any. If you do not have a Union, then you can call a meeting of the workers, take them into confidence, and make necessary changes in the food policy. It is always desirable to have a uniform system for all employees. When there are a few employees who are not taking food from the canteen, they may feel at a loss compared to those who regularly take free food from the canteen.
Addressing Disparity in Food Costs
If the cost of food is not included in the wages, there would be disparity. That can be remedied by adding the cost of food to the wages and then deducting a nominal amount from the wages of those who avail of food. The taxability of any free food, being a perquisite in the hands of the employee, may be discussed with your Chartered Accountant.
From India, Kannur
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Salary Break up - After deduction.xls
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(Fact Checked)-Your explanation is largely accurate, especially regarding the necessity of notice under Section 9A of the Industrial Disputes Act before altering any conditions of service. However, please consult a tax expert for GST implications. (1 Acknowledge point)