Hi Seniors,
Here is a scenario on which I would request to share your views.
Some of our on roll employees sits at client place and the client is providing them internal meal coupons worth 64/- per meal, which can be used only at client premises. They are neither "Sodexho coupons" nor the "pre-paid electronic meal coupons".
Now the client have send us below mail and have asked us to deduct the Tax from our employees in our books of account.
This is in reference to the Food Facility (Food Coupons) provided by the company.
As it has been made mandatory by the Income Tax Act 1961 - if the cost of meal provided by company exceeds Rs.50 per meal then the entire (monthly) amount of cost of lunch provided to employee shall be subjected to Tax Deduction.
In our case, cost of coupon is about INR 64 = INR 56 + INR 8 (Tax @ 13.5%)
So the income of all the employees weither on rolls of company or off roll, who are availing this benefit would be subjected to Tax Deduction as per their Tax Liability.
From the new financial year, starting from April 2011 – Company would implement the tax deduction on the meal facility (it means in July Salary Payout – there will be tax deduction for 3 months: April - June)
P.S. The deduction will be done based on immediate previous month lunch coupon booklet issued i.e. in April 2011, deduction would be based on coupons issued for March 2011.
Now my question is that :-
1) Since these coupons are not issued by Issuing Bank (** Issuing Bank - means a banking company which issues the coupon to the employee in pursuance of an agreement entered with the employer and has also entered into a contract with the member established authorizing him to allow purchases against the coupon, issued by it in accordance with the conditions stipulated in 115WB(2)(iii) and Rule 40(E) of Income Tax.) - How can the internal paper coupons be considered for Tax deduction ?
2) These coupons can only be used at client premises - Is it valid to add the value of paper coupons in employee income ?
3) We as a vendor is not showing any value of meal coupons given to our employee as the meal is provided by client - How can we add meal value in books of account if the food coupon is not provided by us ?
4) Isn't this the liability of our client to show the value in their books of account as the food coupons given to our employees is just like a food coupon given to a guest if they visit our client ?
Request to guide on above points.
Rgds..Kumar Anand
HR - SAMSUNG
From Korea
14Here is a scenario on which I would request to share your views.
Some of our on roll employees sits at client place and the client is providing them internal meal coupons worth 64/- per meal, which can be used only at client premises. They are neither "Sodexho coupons" nor the "pre-paid electronic meal coupons".
Now the client have send us below mail and have asked us to deduct the Tax from our employees in our books of account.
This is in reference to the Food Facility (Food Coupons) provided by the company.
As it has been made mandatory by the Income Tax Act 1961 - if the cost of meal provided by company exceeds Rs.50 per meal then the entire (monthly) amount of cost of lunch provided to employee shall be subjected to Tax Deduction.
In our case, cost of coupon is about INR 64 = INR 56 + INR 8 (Tax @ 13.5%)
So the income of all the employees weither on rolls of company or off roll, who are availing this benefit would be subjected to Tax Deduction as per their Tax Liability.
From the new financial year, starting from April 2011 – Company would implement the tax deduction on the meal facility (it means in July Salary Payout – there will be tax deduction for 3 months: April - June)
P.S. The deduction will be done based on immediate previous month lunch coupon booklet issued i.e. in April 2011, deduction would be based on coupons issued for March 2011.
Now my question is that :-
1) Since these coupons are not issued by Issuing Bank (** Issuing Bank - means a banking company which issues the coupon to the employee in pursuance of an agreement entered with the employer and has also entered into a contract with the member established authorizing him to allow purchases against the coupon, issued by it in accordance with the conditions stipulated in 115WB(2)(iii) and Rule 40(E) of Income Tax.) - How can the internal paper coupons be considered for Tax deduction ?
2) These coupons can only be used at client premises - Is it valid to add the value of paper coupons in employee income ?
3) We as a vendor is not showing any value of meal coupons given to our employee as the meal is provided by client - How can we add meal value in books of account if the food coupon is not provided by us ?
4) Isn't this the liability of our client to show the value in their books of account as the food coupons given to our employees is just like a food coupon given to a guest if they visit our client ?
Request to guide on above points.
Rgds..Kumar Anand
HR - SAMSUNG
From Korea
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