Sodexo Meal Card Tax Exemption and Benefits

A large number of companies provide food vouchers, like Sodexo meal cards, as a perk for their employees. The prepaid card can be used to buy food and non-liquor beverages. Sodexo has associated with well-known retailers like Swiggy, Zomato, Burger King, Pizza Hut, KFC, Spencer's, Big Bazaar, among others. It can be availed only in partner outlets and now even in grocery shopping.

Now known as the Pluxee Meal Benefit in India, the Sodexo card is being accepted across 1,700 cities and towns at more than 1,00,000 establishments across the country. As the deduction is made from your hand salary, the card is provided by most employers as an optional benefit, which is not provided on request. Continue reading to know how Sodexo meal cards may save you taxes and are definitely worth considering!

What is a Sodexo Meal Card?

The Sodexo meal card is a form of perquisite provided by companies to their staff. The prepaid card allows employees to buy food, groceries, and soft drinks without paying out-of-pocket at the point of purchase. The value loaded on the card, however, is added to the employee's Cost to Company (CTC).

This digital meal card resembles a regular credit or debit card and must be activated before use. For every transaction, you’ll need to generate a PIN or OTP through the Sodexo (Pluxee) mobile app to complete the payment securely.

Sodexo Meal Card Tax Benefits

Most employees think Sodexo meal cards are free from tax liability. However, this is not true wholely. 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, this exemption will be available only in the old tax regime and will be taxable in the case of the new tax regime.

A calculation based on 22 working days and 2 meals a day results in a monthly benefit of Rs.2,200 (22*100). Consequently, the yearly exemption works up to Rs.26,400.

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

Upon availing 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.

If the employer provides meal vouchers at a discounted rate, the value exceeding ₹50 per meal is taxable. For instance, if a meal voucher is worth ₹500 and the employee pays ₹150, the taxable perquisite is calculated as follows:​

Voucher value exceeding ₹50: ₹500 - ₹50 = ₹450

Amount paid by the employee: ₹150

Taxable perquisite: ₹450 - ₹150 = ₹300​

Therefore, ₹300 would be added to the employee's taxable income.

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 are 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. Sodexo Meal Cards can offer tax benefits, it's crucial to ensure they are used in compliance with the specified conditions to avail of exemptions. Employees should consult with their employers or tax professionals to understand how these benefits apply to their specific situation.