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Conditions on issue of Prepaid Meal Card !!

Chartered Accountant


INCOME TAX NOTIFICATION NO. 1/2009,


INCOME-TAX ACT (FIRST AMENDMENT) RULES, 2009 IN SECTION OF RULE 40E

 

 

In exercise of the powers conferred by section 295 read with sub-clause (iii) of clause (B) of sub-section (2) of section 115WB of the income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-fax Rules, 1962, namely :

 

1. (i) These rules may be called the Income-tax (First Amendment) Rules, 2009.


(ii) They shall come into force with effect from the 1st day of April, 2009.


2. In the Income-Tax Rules, 1962, in Part VIIC, after rule 40D, the following rule shall be inserted, namely:


“Prescribed conditions for the purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB.


40E. For The purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB, the non-transferable pre-paid electronic meal card (hereinafter called The “card”) shall fulfill the following conditions, namely:


(i) The care shall be granted by the employer lo its employees under a scheme framed by the employer specifying therein the circumstances under which the meal card can be used by The employee.


(ii) The card under clause (i) shall be issued by the issuing bank.


(iii) An employee shall not be issued more than one card.


(iv) The card shall bear the name of the employer along with the name, photograph and signature of the employee to whom the card is issued.


(v) The card shall be used only .by the employee to whom the card is issued.


(vi) The card shall be used by the employee only for the purpose of purchasing ready to eat food or nonalcoholic beverage from a member establishment.


(vii) The aggregate amount of ready to eat food or nonalcoholic beverage purchased during a day by an employee shall not exceed one hundred rupees.


(viii) The details of each transaction of purchases made by the employee against the card shall be maintained by the employer and the member establishment in such manner and for such period as is required under the Act for any other similar transaction.

Explanation. - For the purposes of this rule,


(i) “banking company” shall have the same meaning as assigned to in clause (viii) of sub-section (1) of section 36 of the Act’


(ii) “issuing bank” means a banking company –


(a) which issues the card to the employees of an employer in pursuance to an agreement entered into with the employer,and


(b) which has entered into a contract with the member establishment authorizing him to allow purchases against the card, issued by it in accordance with the conditions stipulated in sub-clause (iii) of clause (B) of sub-section (2) of section 115WB and this rule,and


(iii) “member establishment” shall mean a restaurant, hotel, canteen or an outlet which sells ready to eat food or non-alcoholic beverage, but shall not include a restaurant, hotel, canteen or an outlet selling alcoholic beverage.”

[F. No. 133/70/2008- TPL]

 
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professional accountant

 please also post your comments so that we may more benifited.

 
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Will this limit of Rs 100 per person apply to meal coupons like sudexo as well(?)

 
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Professional


this seems to be something unrealistic....why the limit of Rs 100 on daily purchases, if employee wants to purchase worth rs 1000 once in a mth on a single day, it means he wont be able to do it....if this is condition, then employer should think twice prior to issuing card to employees

 
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Agreed. What is further to be interprested is whether the employee is any better off if coupons are issued instead of Card? Two things: (1) Notification No. 1/2009 provides ....... ...... 2. In the Income-Tax Rules, 1962, in Part VIIC, after rule 40D, the following rule shall be inserted, namely: “Prescribed conditions for the purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB. 40E. For The purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB, the non-transferable pre-paid electronic meal card (hereinafter called The “card”) shall fulfill the following conditions, namely: .............. ................ (2) 115WB(2)(B) is as under (B) provision of hospitality of every kind by the employer to any person, whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade but does not include: (i) any expenditure on, or payment for, food or beverages provided by the employer to his employees in office or factory; (ii) any expenditure on or payment through paid vouchers which are not transferable and usable only at eating joints or outlets; (iii) any expenditure on or payment through non-transferable pre-paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed; (which have now been prescribed as per the Notification above) Sudexo coupon is covered under sub-clause (ii) (of clause (B) of sub-section (2) of section 115WB) as above - & not sub clause (iii). Hence, per se, this Notification does not apply to Sudexo coupons. However, logically speaking, coupon or card is only a medium thru which payment is made. If the present notification prescribs limit of Rs 100 (per day per person) on card, it can be also be extended to coupon. Also, I feel that there 2 questions still open and need to be deliberated further: 1.If we assume 22 working days, what will happen in month of Feb when there are only 28 calendar days & 20 working days? Should we issue Suxedo each month depending upon no. of working days in that quarter? 2. What if in any month, I am alloted coupons for 22 days and I am on leave for say 12 days?

 
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Programmer Analyst


Hi

If the employee can use only 100rs per day, that should count for three meals..

We cant find any restaurent or malls where they allow us for swiping below 100rs, am i right?

At least they should have made it as 3000pm, instead of 100/day

 

 

 
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