Sodexo Meal Card Tax Exemption and Benefits

Employers often provide food coupons like Sodexo meal cards to their employees. Employees can use this prepaid meal card to buy free food and non-alcoholic beverages. Sodexo partners with renowned merchants like Swiggy, Zomato, Burger King, Pizza Hut, KFC, and even Spencer's, Big Bazaar, etc. You can apply the card to purchase food and beverages from the partnering merchants only. These cards even allow you to buy groceries these days.

A Sodexo meal card is accepted in more than 1,700 cities and small towns in India across more than 1,00,000 points of acceptance. Generally, the expenses of food are deducted from your in-hand salary. Thus, most companies keep this meal card optional and only issue it when employees ask for it. Keep reading to know how Sodexo meal cards save tax and why you should use them!

What is a Sodexo meal card?

The Sodexo meal card is a type of perquisite an employer offers to employees. These prepaid coupons allow employees to buy food, groceries, and non-alcoholic beverages. Employees need not pay any amount while buying food or groceries using this card, but the company adds this amount to the employees' CTC.

This digital card looks similar to your credit or debit card, and you need to activate this card for usage. Every time you use this card, you need to use the Sodexo application on your mobile to generate a PIN or OTP for the transaction. 

Sodexo meal card tax benefits

Most employees think Sodexo meal cards are free from tax liability. However, this is not true partially. As per Section 17(2)(viii) of the Income Tax Act, free meal cards are taxable if the amount spent per meal exceeds Rs.50. Employees must pay taxes for the amount exceeding Rs.50 per meal.

However, if your company provides free food or snacks during working hours in office premises or a business organisation, that is not liable for taxation. Thus, the tax-free amount of this meal card also depends on the working hours of your organisation.

Upon availing of a Sodexo meal card, you must select an expense limit, which is the maximum expense you can make through the card. The company will add this fixed amount to your CTC and deduct it from your in-hand salary. However, it will help you save on tax payments as you need to pay income tax for the in-hand amount only. Thus, the amounts spent on the Sodexo card are not liable to tax in this way.

Sodexo meal card tax exemption

Now that you know what a Sodexo meal card is, you should know about its tax exemptions as well. As per Section 17(2)(viii) of the Income Tax Act, the following meals are eligible for a tax exemption under the Sodexo meal card:

• Food and non-alcoholic beverages offered by your employer within your working hours in an offshore installation or remote area.
• Non-alcoholic beverages like tea, coffee, and snacks provided during working hours are categorised as tax-free.
• Employer offering food through non-transferable paid vouchers that can be used only at food joints or in office premises is exempted from tax liability (the cost per meal should be within Rs.50)

Final Word

So, now you know how the Sodexo meal card saves tax, you can avail it from your employer based on your benefits. Though tier-2 and -3 cities may not broadly accept these meal cards, it can be beneficial for those living in tier-1 cities. Depending on the expenses in tier-1 cities, a Sodexo meal card can help you save taxes on the amount spent on food and groceries. 

Frequently Asked Questions

Is Sodexo included in 80C?

No, Sodexo meal cards are not included in section 80C of the Income Tax Act. It is mentioned in section 17 (2) of the Income Tax Act under perquisites. 

How much tax we can save on Sodexo?

Sodexo food coupons are one of the unconventional ways of saving your income tax. With this meal card, you can save an annual tax of up to Rs.12000.

Is TDS applicable for Sodexo?

According to Section 194C of the Income Tax Act, individuals responsible for making payments to resident contractors or subcontractors should deduct tax at source. However, if an employer provides Sodexo coupons to employees, it is not amenable to the provision of TDS.

Is Sodexo tax-free in the new tax regime?

Specific tax exemptions and deductions need to be forgone in the new tax regime. As per the Finance Act 2023, the new tax regime no longer includes perquisites and allowances, including food coupons like Sodexo, etc.