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7 things to know about taxability of food coupons or meal vouchers given by the employer

As part of the salary, many companies give meal vouchers (famous one is Sodexo coupons) to the employees. Are such vouchers free from taxes? Here are some points about it

 

  1. Tea or snacks provided by the employer during office hours is exempt from tax

 

  1. Meal or lunch allowance or refreshment allowance is a perquisite, taxable under Income Tax Act. However, if free meal (i.e., food and non-alcoholic beverages) voucher such as Sodexo Pass, is provided by the employer during office hours at office or business premises, up to Rs.50 per meal given to the employee is exempt from tax.

 

  1. These meal vouchers (non-transferable) provided by employers’ should be encashed only at an eatery, a restaurant or a cafe.

 

  1. Can the employer give 2 meal vouchers per person per day for 30 days a month? It depends upon the number of days of work by the employee. If the employee is taking two meals during office hours and works for 22 days, then he will be eligible for Rs.2200 worth of vouchers (i.e., 22 days * 2 * Rs.50). Any voucher/allowance given over and above this amount is taxable in the hands of the employee as taxable perquisite.

 

  1. Can meal vouchers be used at department stores or super bazaars to buy household items? As per the provisions, the meal coupons are to be used/exchanged only at eating joints. However, the departmental stores or super bazaars accept the coupons and there is no mechanism for the employer to check whether the employee has used it at eating joint or at stores. So, practically, even if the coupons are used at stores, it is acceptable.

 

  1. Should meal vouchers to be given on monthly basis? No. there is no rule as such. The employer can issue coupons on monthly or quarterly or whenever they wish.

 

  1. Should this perquisite be shown in payslip? Not necessarily. It is a non-cash perq, it needn’t figure in payslip

  

Thought for the day

 

Your best teacher is your last mistake

 

 

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About CA Prasad Chartered Accountant

CA Prasad Chartered Accountant
CA Prasad is a practicing Chartered Accountant and partner in Bangalore -based CA Firm. For further information or query, please email it to [email protected]
  • Thee Arin

    How are you looking at this – Breakfast + Lunch amount (Rs. 50/- each)
    Is snacks a permissible thing. (4 pm snack break I see people inside tech parks in Blore, Hyd going out to munch something)

    Please advice.

  • Thee Arin

    Digi card is more to track employee usage for food/eatery joint or elsewhere.
    Also per the latest guidelines (RBI i think) card and not voucher is permissible.

    Please guide how are you tracking esp. for exits.

  • Barkha

    If my office timings are from 9.30 am to 6.30 pm, can Sodexho coupons be used for 2 meals a day (breakfast and lunch)?

  • Sudeep Sinha

    I have used Ticket Restaurant vouchers, now using Digital Ticket Restaurant Meal Card.
    http://www.edenred.co.in/