Sure, the free meal coupons like Sodexo are liable to tax. Our Earnings Tax legislation treats it as a free perquisite given by the employer to its staff and can be taxed if the worth of the coupon exceeds Rs. 50 per meal.
If the worth of the coupon exceeds Rs. 50 per meal then the surplus worth is taxable as a perquisite within the arms of the worker.
But when there’s any free snacks/drinks supplied throughout the enterprise working hours of the group then it won’t be taxable.
What if the meal coupons are supplied at a reduced charge and aren’t free?
In case the employer is giving discounted coupons however not free, then the perquisite shall be taxable after deducting the quantity paid by the worker from the quantity in extra of Rs. 50 per meal.
For instance, suppose you’ve got acquired a meals coupon price Rs. 500 per meal, for which you paid Rs. 85 to your employer.
First, you’ll calculate the worth of perquisite in extra of Rs. 50 per meal.
On this case it’s, 500-50= 450 per meal.
Secondly, you’ll think about the quantity paid by you, which in our case is Rs. 85 per meal.
Now, the taxable worth in your arms would be the web worth of perquisite (meals coupon) after deducting the quantity paid by you.
So, this shall be, 450 – 85 = 365
Thus, the online taxable worth shall be Rs. 365. This quantity shall be added to your wage whereas computing your whole tax, if not already included.
Which part of the legislation states that the free meal coupons are taxable?
The taxability of the free meal coupons as perquisites is ruled by Part 17(2)(viii) of the Earnings Tax Act.
The excerpt from the Act is given beneath,