Food coupon #
What is a food coupon? #
Food coupons provided by employers to employees through non-transferable vouchers which can be used only at the canteen provided by the employer may be tax exempt only if the cost of such meal is up to Rs—50 per meal.
In case of cost of the free meal is greater than Rs.50 then the excess amount is taxable. An average of 22 working days in a month of 2 meals daily, a sum of Rs 26,400 can be availed as a deduction by an employee annually.
If the food coupon is part of employee CTC, the monthly salary paid at their bank account will be processed after deducting the amount, since they are paid separately.
In recent years, companies in India have been increasingly offering food coupons as a component of employee salaries. These coupons, also known as meal vouchers, are typically given as a non-cash benefit to employees in addition to their regular salary. In this blog, we will discuss the benefits of food coupons as a salary component and their impact on both employees and employers.
Firstly, it is important to understand what food coupons are and how they work. Food coupons are essentially prepaid vouchers that employees can use to purchase meals or food items from authorized merchants or vendors. These coupons are usually issued in denominations of Rs. 50, Rs. 100, or Rs. 500, and are valid for a certain period of time. They can be used to purchase food items either at the workplace canteen or at designated food outlets outside the workplace.
One of the main advantages of food coupons as a salary component is that they are exempt from income tax under Section 10(14) of the Income Tax Act, of 1961. This means that both employers and employees can save on taxes. For employers, offering food coupons as a salary component can also help to reduce their tax liability, as they can claim a deduction for the cost of providing this benefit to their employees.
From an employee’s perspective, food coupons can be a useful addition to their salary package. They provide a convenient way to purchase meals and snacks without having to carry cash. Additionally, food coupons can help employees to save money on food expenses, as they are usually offered at a discounted rate. For example, an employee may receive a food coupon worth Rs. 100, but the actual cost to the employer may be only Rs. 90. This means that the employee can purchase food items worth Rs. 100, but only pay Rs. 90 for them.
Another advantage of food coupons is that they can help to improve employee satisfaction and motivation. By offering food coupons as a salary component, employers can show that they value their employees and are committed to providing them with benefits beyond just their regular salary. This can help to increase employee loyalty and reduce turnover, which can ultimately benefit the company in the long run.
Finally, food coupons can also be a good way to promote healthy eating habits among employees. Many companies that offer food coupons as a sa9lary component also ensure that the food items available for purchase are nutritious and healthy. This can help to encourage employees to make healthier food choices and lead a more balanced lifestyle.
In conclusion, food coupons can be an effective way for companies to provide additional benefits to their employees while also reducing their tax liability. From the employee’s perspective, food coupons provide a convenient and cost-effective way to purchase meals and snacks, while also promoting healthy eating habits. Overall, food coupons can be a win-win situation for both employers and employees.