Income Tax Notice For Sodexo Coupons

Hi Abhay,
The working days depend on Shops and Establishment doc/ Standing Orders where company would have specified working days.
Manufacturing companies can give Rs. 1250 since they have 6 days week. IT companies have 5 days week so that can give 22X50 = Rs.1100.
Regards,
Pranav

Companies giving Rs 3000 can be easily punished. If an employee claims three meals in office, that means employees has worked over time (worked in two consecutive shifts). So has company paid overtime to all such employees who get Rs 3000 Sodexo? :)

At the very outselt, let me clarify that I am not a tax person, or my knowledge is very poor, about taxation.

If the payments of Rs.3000/- per month, are for the current year, I think the question of punishment does not arise. What companies can do, whatever excess payment is done, than the eligibility, i.e. more payment than Rs.1100/1250, they have to consider these amounts as taxable income. Ofcourse, they have to intimate employees accordingly, prior to any deduction of tax.

If the amounts relate to coupons issued, in previous year, I feel they can still make deductions of tax, wherever applicable, and remit to authorities, with some penalties.

p.s. Since Sodexo coupons etc. are operative for more than past 10 years, I have strong doubts about the tax implications. There are huge chances, that these Companies have appropriate approvals from IT dept, for issuance of coupons, and accordingly they must be convincing their customers, proving all legalities.

I shall make more enquiries in this, and will update shortly, since I know few friends who get such kind of coupons from their employers

Hi Guys,

All you guys seem to put so much emphasis on right and wrong, in terms of meal allowance being taxable or not and that it should be INR 50.00 a day, and a whole lot of other jargons related to IT dept. and what they consider and how they consider. However we forget to take note that, except in maybe one or two cities, in which IT/ITES/BPO sector (location) can you find a meal (a whole decent lunch) for Rs. 50.00. As per some wisecrack sitting somewhere high up the bureaucratic ladder, anybody earning more than Rs.45 a day is not considered to be BPL, (Below Poverty Line). I know scores of people who may earn 5 times that amount and yet, life isn't exactly easy for them, I'm sure a lot of us will relate to that. My point being, at least our companies (mnc's) we work for understand and payout extra so you can have that THALI costing Rs. 150.00, (or eat egg maggi in Rs. 50.00) then why are we spoiling a perfectly good thing. In a country that is governed by people, who leave you needing more throughout our middle class lives, why are we having a problem with something, that for once is working out to our advantage. (don’t take me otherwise guys, it’s just an opinion )

Thanks & Regards

Jintan Dinesh

Pon
Meal allowance exempt under the income tax was specifically for meals at office or during work hours on official work.
Any other allowance would be taxable.
When FBT was introduced, these coupons were made taxable.
Then the change was made (after the 2 major coupon companies paid huge bribes to the finance ministry) they added such coupons to the meals.
In reality and under existing law, use of these coupons at any place other than for food at work place is taxable and the income tax department can take action.
I think the PIL will have a major impact on many companies and on these 2 coupon companies in specific.

Dear friends
In these days of READY-TO-EAT meals, which require just warming or heating; as well as READY-TO-EAT snacks, including Biscuits; Fruits and Fried Wafers etc. available in Grocery stores; one can buy these with the Sodexho coupons and eat.
There are no regulations on what constitutes a meal. Packed foods by ITC or MTR just need to be warmed, to be eaten.
#2; An employee can take credit for days and pay the outstanding in bulk on a day with coupons. where is the illegality in it ??
It is surprising that in the days of multi-crores scams taking place every week with alarming irregularity, such pea-nuts of payments for ACTUAL CONSUMPTION by common man is being examined so thoroughly !!!!
Instead of getting ALARMED or AGREEING with such insinuations against the hard-working, tax-paying working class; it was expected that people would STAND UP for their rights and perquisites, rather than SUCCUMBING MEEKLY to pressure.
Warm regards.

Taj,
Believe me, these are not small amounts.
The amount of tax evasion is very high. It could make the politicians blush with shame at missed opportunity.
Most large retailers also want this stopped, and they have some very valid reasons.

In fact, the large retailers are in favour of Sodexho coupons. It adds considerably to their Top and Bottom lines.

I have ascertained this from Big Bazar, EasyDay, More and Reliance Stores.

Big Bazar already has opened a few food-counters which serve food-items, just to comply with the IT regulations.

Salaried people are the only class (unlike other professionals like consultants who can accept black money or enable others to make white money) who can not escape their tax liabilities. The tax evasion is minimal, if any, coz every family buys and consumes FOOD ITEMS (even if a person brings food from home and does not spend the Coupon everyday).

Invariably, it is used for buying food-items in stores.

Believe me, the paltry tax-free amount of Rs. 1250 for a month, can not buy food stuffs even for a single-person family for a month !!!

So, how can a common salaried person evade HUGE AMOUNT OF MONEY ??

In any case, these coupons are NOT HOARDED; but invariably used in Grocery stores.

Only politicians, who are far away from the stark realities of life (like Onion and tomatoes are available at Rs. 80 per kg, average good rice at Rs. 60/kg,, potatoes at 30/kg etc.) and are used to figures of Crores of rupees, can claim something of this nature !!!

In fact, it is high time that the salaried class demands that this amount, which has remained the same for quite a few years; be enhanced to at least 3 times, in view of the rising prices of consummables.

Having used sodexo coupons myself, I was wondering, if it helps me or hurts me...

I am unaware on the legality terms, but things that I have noticed -

1. Sodexo coupons are accepted at restaurants and at malls to buy ready meals / packed food / cooked food

2. Few retailers charge extra to accept sodexo or they don't accept sodexo at all coz they have to shed few extra bucks from their pocket. (The concept is similar to few retailers charging you extra when you pay by swiping your credit / debit cards)

3. Though the logical concept is that a meal of 50 is not taxed and is paid on daily basis, so we are to give 50*2 = 100 Rs a day for meal allowance. Now if the person on a said day brings a tiffin, should we say that he is not eligible to meal allowance?

4. Today he wanted to have something special which he can't buy in 50 Rs. so he adjusted his meal voucher for the day he brought tiffin with, what's illegal in this?

5. I am unaware if there are companies who give sodexo coupons worth 3000 pm, I have known a few firms giving 1250 as food allowance, partly as cash and partly as sodexo or the whole amount as sodexo.

6. I will agree to the fact that meal allowance is mentioned to be given for the days when the person is on duty - either in office or outside.... However, as someone rightly mentioned, if the person is on field and is unable to have a proper meal in 50 Rs as prescribed by the IT regulations, how to compensate him?

There is a reason why sodoxo and ticket is not accepted by restaurants.

These are : high rate of commission charged (banks charge 1.5% for credit cards, sodexo is charging 2.5% to 7.5%)

Delay in settling : min 45 days

Major Reconciliation Problems

Disputes relating to authenticity of claim

High level of frauds due to duplicate / fake sodoxo coupons.

Unlike what our senior members just wrote, the retailers like big bazaar and reliance fresh are not accepting these coupons happily. They are being coerced into accepting the same since they are losing out on sales (in a very competitive market). Most of them have realised that accepting the coupons is a direct loss as the discounts given are at times more than margins on the sale. However, they are considering it as a loss leader. And are happy that their management has no way to measure whether the loss leader is resulting in profits in other areas.

As for the rest of your query, the income tax department will not going to come after you personally. So it does not matter whether you are using the sodexo coupons for buying clothes or for lunch. Since its an allowance, it is to be given irrespective of whether the person is using it or not. Its like conveyance allowance of Rs. 800 per month tax free under the income tax laws which is paid irrespective of whether you come to office or not.

The income tax law has nothing that prevents you from reimbursing cost of meals that is allowed under your own rules (earlier there was FBT, which has been removed). What is limited is the Food Allowance (which is a tax free perquisite). I hope you understand the difference between reimbursement of expenses incurred in connection with work and allowance paid / payable.