10 June 2009
Services provided at free or concessional rates are gaining popularity. Concessional food,become taxable in the hands of the employer. Sodexho coupons are being provided to the employees over and above the individual salaries. Even though this is exempted in the hands of the employee, the employer has to pay the fringe benefit tax on the same
As per your guidance U/s 17 of Income tax act. IX. Free meals : The provision of free meals varies widely from uniform canteen food, coupons etc. to lavish hotel meals. The scheme of free meals as a staff welfare measure had been recognized and was admissible up to Rs. 35 for each meal. The new rule does not treat as perquisite free meals if the cost per meal does not exceed Rs. 50. Where any amount is recovered from the employee, such amount shall be reduced from the value of perquisite. Such free or subsidised meal should however be provided at office premises or though non-transferable vouchers meant for only meals during working hours. These vouchers should be provided by employers encashable only at an eatery, restaurant or a cafe. Tea or similar non-alcoholic beverages and snacks - in the form of light refreshments during working hours are not charged as perquisite. Also, arrangements for meals in ‘remote areas’ as prescribed in para 5.1(I) and similar off-shore sites as specified, shall be exempt. "However, expenditure on provision of free meals by the employer in excess of Rs. 50 should be treated as perquisite, as reduced by recoveries made from the employee."
Reference to the above line as per my understanding, Expenses which exclude Rs.18000/- P.A which means Rs.1500/-P.M. is treated as perquisite (Including Sodexho Meal Vouchers)and it is taxable rest amount am i correct. Please rectify if Iam Wrong.