28 November 2008
I am an employee of a company. We have received the following circular from our HR department.
Is it right, bcoz as per Income Tax Act we can give exemption up to 50 rs per day only?
I am calculating tax on salaries of all the employees of the company. so i want the answer.
Whether we have to pay FBT on the same?
HR/PERS/ACCOR/2008 Date: 25/11/2008
CIRCULAR
Sub: Income tax benefit for employees by providing Accor Meal Vouchers.
Dear colleagues,
In our continuous endeavors to provide maximum income tax free salary to our employees, we hereby propose to provide Accor meal vouchers every month as part of CTC.
The details are as under:
a. The Accor meal vouchers will be provided to all the employees, as per the consent taken from each employee in writing. b. The maximum amount allocated for the coupon will be as under: I GM & above - Rs. 3500/- per month II Dy Manager to Dy GM - Rs. 2500/- per month III Upto Asst. Manager - 2000/- per month
c. The above amount will be adjusted from canteen coupon reimbursement and remaining amount from special allowance of CTC. d. The Accor meal voucher will be in form of booklets containing voucher of value in denomination of Rs. 5,10,50,75 e. The Accor meal voucher will not be taxable in the hand of employees as well as no FBT is to be paid by the company. f. The Accor meal voucher can be used in number of food outlets across India and can be used as mode of payment for Purchase of services / food instead of paying cash. g. The frequently asked questions with their reply are as under which will give full clarity in the matter. h. The distribution of coupons at Ahmedabad will be through Facilities department and at branches will be through one of the Specific representative whose name will be declare with in short period. i. The ticket restaurant all India directory i.e. where coupon can be used, is available on circle D.
The scheme is voluntary and hence those who are interested in availing this scheme so as to save income tax may send / give their consent within four days, stating their ;
1. Employee No. 2. Name 3. Designation 4. Department 5. Place of posting
On mail id employeecare@x.com or to Mr. A - Executive – Personnel
Hope this newly introduced system of meal voucher will be useful to our colleagues and will take benefit to save their income tax.
03 August 2024
The circular from your HR department regarding Accor meal vouchers and its tax implications involves a few key points. Here’s a breakdown:
### **1. Income Tax Treatment**
- **Exemption Limit:** According to the Income Tax Act, the exemption for meal vouchers is up to ₹50 per meal per day. This means that the value of meal vouchers provided to employees is exempt from tax only if it does not exceed this limit.
- **Excess Amount:** If the meal vouchers exceed ₹50 per meal per day, the excess amount will be considered taxable.
### **2. Taxability and FBT (Fringe Benefit Tax)**
- **Meal Voucher Exemption:** Under the Income Tax Act, if vouchers are provided up to ₹50 per meal per day, the amount is generally exempt from tax. Any amount exceeding this exemption limit may be taxable as part of the employee’s salary.
- **Fringe Benefit Tax (FBT):** Fringe Benefit Tax was abolished from April 1, 2009. Therefore, you do not need to pay FBT on meal vouchers or any other benefits provided to employees. However, this does not affect the taxability of the benefit in the hands of the employees.
### **3. Compliance with Circular**
- **Amount Allocation:** The circular specifies different amounts allocated for different levels of employees, which is above the ₹50 per meal exemption limit. Hence, the total vouchers provided in excess of ₹50 per meal/day would be taxable for the employees.
- **Company’s Circular Stance:** The circular stating that no FBT is to be paid and that the vouchers will not be taxable might be misleading if it contradicts the actual tax rules. Employees should consider the portion of the voucher value that exceeds the exemption limit as taxable income.
### **4. Action Steps**
- **For Employees:** Ensure that the portion of the voucher amount exceeding ₹50 per meal/day is reported as taxable income in your personal income tax return.
- **For Employer:** The company should consider adjusting the voucher amounts or providing the correct tax treatment to avoid potential tax issues.
### **Conclusion**
The circular's claim that no tax will be applicable and no FBT will be paid might not fully align with the Income Tax Act's provisions. Employees should ensure that any amount exceeding ₹50 per meal per day is accounted for as taxable income. The HR department should ensure that the vouchers' value complies with the exemption limits and that the tax treatment is correctly applied.
If there is any doubt or potential discrepancies, it’s advisable to consult with a tax professional or advisor to ensure compliance with tax laws.
CAclubindia
