Tds on subsidized canteen facility to employee
This query is : Resolved
22 December 2012
Please help whether TDS is to be deducted on the value of subsidy on food facility during the office hours in the premises of the office. For Example If the Cost of the food is 45/- and is given at 10/- so would Rs 35(45-10) be treated as Perquisite and will be subject to TDS.
Please also refer the section or case law
Please also refer the section or case law
22 December 2012
Hey hi,
Expenditure on free meals in excess of Rs.50 per meal shall be taxable perquisite to the extent of excess amount in hands of all employees, since in your case its not exceeding 50 rupee hence no perks & no worries.
Hope this helps.
Cheerz//Vaibhav
Revert for more clarity.
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Expenditure on free meals in excess of Rs.50 per meal shall be taxable perquisite to the extent of excess amount in hands of all employees, since in your case its not exceeding 50 rupee hence no perks & no worries.
Hope this helps.
Cheerz//Vaibhav
Revert for more clarity.
Click thank button to convey your appreciation.
23 December 2012
In case of valuation of the cost of the meal, salary paid to the cook and canteen staff is also to be included or just the cost of material will form part of the cost to the company.
As in the one of the case it was observed that the company is overstaffed and hence to utilize this staff they have deployed people in canteen department (Can the reason of over staffing sustain in not including the salary paid to the canteen staff/workers as salary paid to these employee is a fixed cost to the company)
As in the one of the case it was observed that the company is overstaffed and hence to utilize this staff they have deployed people in canteen department (Can the reason of over staffing sustain in not including the salary paid to the canteen staff/workers as salary paid to these employee is a fixed cost to the company)
27 July 2025
Great question about TDS on subsidized canteen facility! Here’s a detailed explanation:
---
### Is TDS to be deducted on subsidy on food provided to employees?
**Short answer:**
* No TDS is required **if the value of free or subsidized meals provided to employees does not exceed Rs. 50 per meal**.
* If the value exceeds Rs. 50 per meal, the excess amount is treated as a **perquisite** and is taxable as part of salary. TDS on salary income would apply accordingly.
---
### Legal provision & valuation
* As per **Income Tax Rules**, meals provided free or at subsidized rates to employees are taxable perquisites only if the **value exceeds Rs. 50 per meal**.
* The **value of the meal** includes the cost of raw materials, preparation, cooking, and serving. It should be the **actual cost incurred by the employer** including salary paid to cooks and canteen staff, not just material cost.
* The fact that canteen staff salaries are fixed or due to overstaffing does not exclude their salary cost from the valuation of the meal. The total cost to the company for providing meals is relevant.
---
### Practical example:
* Cost of food = Rs. 45
* Employee pays = Rs. 10
* Subsidy = Rs. 35
* Since Rs. 45 < Rs. 50 per meal threshold, **no taxable perquisite arises**. No TDS required.
If cost were, say, Rs. 60, then Rs. 10 (60 - 50) is taxable perquisite, and TDS should be deducted on that amount as part of salary.
---
### Case law / references:
* The principle of including salaries of canteen staff in valuation was upheld in various tax authorities' rulings emphasizing **actual cost to employer** as basis for valuation, regardless of fixed salary nature.
* This is consistent with the **CBDT guidelines** on valuation of perquisites.
---
If you want, I can help you with a formal write-up or TDS calculation template based on these rules. Would you like that?
---
### Is TDS to be deducted on subsidy on food provided to employees?
**Short answer:**
* No TDS is required **if the value of free or subsidized meals provided to employees does not exceed Rs. 50 per meal**.
* If the value exceeds Rs. 50 per meal, the excess amount is treated as a **perquisite** and is taxable as part of salary. TDS on salary income would apply accordingly.
---
### Legal provision & valuation
* As per **Income Tax Rules**, meals provided free or at subsidized rates to employees are taxable perquisites only if the **value exceeds Rs. 50 per meal**.
* The **value of the meal** includes the cost of raw materials, preparation, cooking, and serving. It should be the **actual cost incurred by the employer** including salary paid to cooks and canteen staff, not just material cost.
* The fact that canteen staff salaries are fixed or due to overstaffing does not exclude their salary cost from the valuation of the meal. The total cost to the company for providing meals is relevant.
---
### Practical example:
* Cost of food = Rs. 45
* Employee pays = Rs. 10
* Subsidy = Rs. 35
* Since Rs. 45 < Rs. 50 per meal threshold, **no taxable perquisite arises**. No TDS required.
If cost were, say, Rs. 60, then Rs. 10 (60 - 50) is taxable perquisite, and TDS should be deducted on that amount as part of salary.
---
### Case law / references:
* The principle of including salaries of canteen staff in valuation was upheld in various tax authorities' rulings emphasizing **actual cost to employer** as basis for valuation, regardless of fixed salary nature.
* This is consistent with the **CBDT guidelines** on valuation of perquisites.
---
If you want, I can help you with a formal write-up or TDS calculation template based on these rules. Would you like that?
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