The recent Sodexo Meal Coupon fiasco seems to be causing a whole bunch of stress and heartburn to employees everywhere. Read through this FAQ issued by D’s office to see the kind of thought’s running through employees’ minds —
- Why are you changing the existing agreement? Why canâ€™t we continue with the same?
The Law has been there since long, but the Income Tax Department has become more stringent in order to minimize issues of non-compliance. Hence, to ensure compliance our finance department has had to change the existing policy. The Income Tax Law states —
The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity. Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.
- Why just Rs 750 per month and why not more?
As the Law states we need to take into account all of the free snacks, coffee, tea, biscuits etc. that are made available during office hours. Hence, we have set an amount that would be seen as the right amount by the Income Tax Department for extending the tax benefit.
- Why can’t we trust employees that they would use the physical meal vouchers only in the office?
One of the requirements under the Income Tax Act is that the benefit is to be extended for eating in food joints and during working hours. The change being made would ensure that the tax agencies are satisfied that Company as an employer has put in place clear process requirements to meet the tax requirements. Please note that as an employer, Company has the onus and responsibility to ensure strict compliance with all Income Tax Rules and Regulations as far as an employeeâ€™s Company-related income and benefits are concerned.
- When other companies are continuing with the meal vouchers, why cannot we continue with the meal vouchers?
As mentioned before, we are committed to the compliance of applicable Laws from time-to-time. We did check with other companies of our size and nature and found that they have changed the program or are in the process of changing it. The benchmark results indicated the following —
Companies Surveyed: 20
Number of Companies using Sodexo: 10
— Few of these Companies are considering stopping of Sodexo Meal Vouchers
— Half of these Companies allow the usage of Sodexo Meal Vouchers only in their cafeteria
Number of Companies NOT using Sodexo or any other Coupons: 10
- How do we know that employees are not misusing other programs such as the Company Leased Car Program or any other benefit?
As a Company we can take all precautions to minimize the risk, if still anyone is misusing the same it is a violation of the code of conduct and appropriate action will be initiated.
- Tax saving is an employeeâ€™s right. Why take that away?
We are not taking away any rights. We are doing what is right from a compliance point of view and in line with the spirit of the Income Tax Rules.
- Why cannot Company compensate the excess tax that they have to pay due to this change?
All applicable taxes on employee compensation and benefits have to be borne by the respective employee. Company will extend all tax benefits as per Income Tax Rules to employees and is committed to following the Income Tax Rules in letter and spirit.
- Why cannot I use the Meal Coupons in the eating joints outside of Company office and Campus?
As per Income Tax Rules, the Meal Coupons are meant to be used during office hours and inside the Company premises. Hence, they cannot be used outside.
- Can the Food Court inside the Company Campus accept the new Swipe Cards?
From the Companyâ€™s point, we need to ensure all vendors inside our Company accept these cards. Additionally, we have requested Sodexo to install the machines in the Food Court but it is a decision that Sodexo has to take.
- Are there other benefits that the Company can give which will offset the loss due to Sodexo plan change?
Company has allowed all tax benefits on Compensation/FBP as allowed by the Income Tax Rules. Any change to the tax rules to allow higher benefits from time-to-time will be extended to our employees.
- What happens if your Meal Card still has some outstanding balance at the end of March, 2013?
You should utilize/spend the credit before the end of the Financial Year. This is where the Rs 9,000 per annum limit helps. It is not likely to leave balance if used regularly for meals during office hours.
- What happens if an employee decides to move out of Company and some balance is left in the Meal Card?
The employee should use the balance by the exit date.
- As the opt in/opt out scheme is up to September, 2012, what happens to unutilized balance in the Meal Card if employee decides to opt out in September, 2012 for the next 6-monthsperiod?
Even if an employee opts out in September, 2012, the balance in the Meal Card can be utilized till March, 2013.
What a complicated mess. As I’ve mentioned before, I simply asked D to opt out.