Employee benefit expenses or Mess expenses

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This query is : Resolved

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This discussion clarifies how to account for company-provided employee lunches. The consensus is that expenses incurred for outsourced catering services, where employees are not charged, should be classified under 'Employee benefit expenses', specifically as 'Labour Welfare'.

Marimuthu

Marimuthu (Querist)

19 August 2023 Dear Experts,
1 A company is providing the lunch to its employees through its outsourced catering service providers.
2 It does not charge any amount to its employees,
3 The query is:
a.Whether the expenes incurred by the company, needs to be accounted either as Employee benefit expenses or Mess expenses.
4 Pls clarify

Gokul Sharma

Gokul Sharma (Expert)

19 August 2023 Staff Welfare can be debited............

Message likes : 1 times

RAJA P M

RAJA P M (Expert)

19 August 2023 Yes, It can be account as Labour Welfare under Employee benefit expenses...

Message likes : 1 times

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

28 October 2026 Booking it as staff welfare is fine; on GST, ITC on the caterer's bill is blocked under Sec 17(5)(b) unless providing canteen food is obligatory under a law such as the Factories Act, and free food to employees under the employment contract isn't a separate supply.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

28 October 2026 Show it under 'Employee benefits expense – staff welfare' in Schedule III; on the GST side, ITC on the outsourced catering bills is blocked u/s 17(5)(b) unless providing a canteen is obligatory under a law (e.g., Factories Act for 250+ workers), so book the GST as part of the expense.

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