Expenditure on food or beverages provided to the employees by an employer--Section 37(2) of the Income-tax Act, 1961--Clarification

Entertainment expenditure rules: employer provided meals for low paid employees may be deductible if genuine and during working hours.

The Board clarified that expenditure on food or beverages provided during working hours to employees whose salary income from employment does not exceed Rs.24,000 (excluding non monetary benefits) need not be treated as entertainment expenditure even if provided outside the employer's premises, provided the expenditure is genuine and reasonable and the employees are not directors or persons with substantial interest; higher paid employees subject to the exclusions in section 17(2)(iii) remain treated as entertainment expenditure.