Thread: Important: Food Card provided by employers

Many employers are providing food subsidy in their work places in multiple ways:

a) Subsidized canteen food
b) Sodexho Coupons or Sodexho Meal Pass
c) Food Card from banks

This discussion is on Food Cards. But first some background.

The Income Tax laws allow food subsidy to be given to employees and stated as an income not subject to tax. The maximum limit is Rs. 3000/- per month.

Accordingly, many employers have done away (or doing away) with option (a) and going in for option (b) or (c). The argument is as follows:

• Not all employees eat in the cafeteria and hence they get no benefit of the subsidy.
• It is difficult and cumbersome to manage the subsidy. Too much administrative overhead on either keeping track of canteen consumption and/or distributing coupons, etc.
• Especially in the IT sector, many employees travel onsite for assignments and hence loose their subsidy.
• It is better to pass the subsidy to the employees.

Some organizations have opted for Sodexho meal pass. But this is also a problem because every month the administrative task of distributing the coupon booklet remains. So enter the meal card.

The meal card or food card is just like a pre-loaded credit card but you can only use it to buy food items. So employees can now use the food card to buy not only food at the office canteen, but also use it in restaurants, grocery shops, etc. Every month, the employer would credit upto Rs. 3000/- on the food card. The employee can use it anywhere as per applicable rules till the loaded amount is consumed.

However, the I-Tax department has now published a circular on the fair use of the Food Card:

• The Food Card may be used to buy read-to-eat food only.
• The expenses on the Food Card may not exceed Rs. 100/- per day.
• Any expense above Rs. 100/- will be taxed as per IT rules.

This has really put the spanner in the works.

All Co. who provides meal coupons (a.k.a. sodexho etc.) are liable for Fringe Benefit Tax

Yes. FBT is applicable. But this now goes beyond FBT.

I have stopped my Food Card because there is no benefit. So why keep the card and have the hassle.