TaxTMI 
TaxTMI 
TaxTMI 
FBT- PREPAID ELECTRONIC MEAL CARDS- a burdensome exemption- can't we think of simple exemptions involving petty payments?
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....BT- PREPAID ELECTRONIC MEAL CARDS- a burdensome exemption- can't we think of simple exemptions involving petty payments?<br>By: - CA UMA KOTHARI<br>Income Tax<br>Dated:- 21-1-2009<br><br>New provision inserted by the Finance Act, 2008: The following new sub-clause was inserted by the Finance Act, 2008, w.e.f. 1-4-2009 in S. 115WB(2)(B) to exclude from value of fringe: "(iii) any expenditure on or payment through non-transferable prepaid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed." This apply from the assessment year 2009-10 covering previous year that begun on 01.04.2008. It was desirable that prescription of conditions should have been fast and immediate. H....
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....owever, after lapsing of more than 3/4th of the previous year, now on 5th January 2009 ,a notification no. 5 of 2009 has been issued to insert a new Rule 40E in the I.T.Rules. The Rule (with highlights) reads as follows: "Prescribed conditions for the purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB. 40E. For the purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB, the non-transferable pre-paid electronic meal card (hereinafter called the "card") shall fulfill the following conditions, namely:- (i) The card shall be granted by the employer to its employees under a scheme framed by the employer specifying therein the circumstances under which the meal card can be used by the employe....
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....e. (ii) The card under clause (i) shall be issued by the issuing bank. (iii) An employee shall not be issued more than one card. (iv) The card shall bear the name of the employer along with the name, photograph and signature of the employee to whom the card is issued. (v) The card shall be used only by the employee to whom the card is issued. (vi) The card shall be used by the employee only for the purpose of purchasing ready to eat food or non-alcoholic beverage from a member establishment. (vii) The aggregate amount of ready to eat food or non-alcoholic beverage purchased during a day by an employee shall not exceed one hundred rupees (viii) The details of each transaction of purchases made by the employee against the card shall be....
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.... maintained by the employer and the member establishment in such manner and for such period as is required under the Act for any other similar transaction. Explanation.- for the purposes of this rule,- (i) "banking company" shall have the same meaning as assigned to in clause (viii) of subsection (1) of section 36 of the Act; (ii) "issuing bank" means a banking company- (a) which issues the card to the employees of an employer in pursuance to an agreement entered into with the employer; and (b) which has entered into a contract with the member establishment authorizing him to allow purchases against the card issued by it in accordance with the conditions stipulated in sub-clause (iii) of clause (B) of sub-section (2) of section 115WB ....
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....and this rule; and (iii) "member establishment" shall mean a restaurant, hotel, canteen or an outlet which sells ready to eat food or non-alcoholic beverage, but shall not include a restaurant, hotel, canteen or an outlet selling alcoholic beverage." An analysis of salient features: The card should be photo and signature card: The photo meal card is to be issued by bank and it will act as a link between the employer, employee, issuing bank and the member establishment for the purposes of purchasing meals and recording of transactions. The employer shall have to formulate a scheme and enter into agreement with issuing bank which has entered into agreement with member establishment. The card will be issued by issuing bank. The card will ....
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....bear photo and signature of employee. And only one card can be issued to any employee. Usages of card: As the card bear photo and signature both, the card can be used only by concerned employee. As per Rule also it shall be used only by the employee to whom the card is issued and only for the purpose of purchasing ready to eat food or non-alcoholic beverage from a member establishment up to maximum of Rs. one hundred on nay day. It appears that the limit of Rs. One hundred on any day is very low, in view of high costs at such establishments. This should be increased with condition that purchase above certain amount per day or per month shall be liable to FBT. Otherwise situation may arise that one has to make part payment by his card ....
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....and part payment by other means. Member establishment: A definite meaning is given as "shall mean a restaurant, hotel, canteen or an outlet which sells ready to eat food or non-alcoholic beverage, but shall not include a restaurant, hotel, canteen or an outlet selling alcoholic beverage." According to this meaning if in any establishment alcoholic beverage is sold, then such establishment cannot be a member establishment. Cant we have simple scheme for controlling petty matter: A question that come to mind is cant we make exemptions and relief simple and practical. Some daily meals at cost of employer at a cost not exceeding Rs. 100/- per day is a very nominal sum for even a factory worker in a good organization. For controlling such....
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.... petty expenses ( per employee) such a complex scheme has been framed and it will involve employee, employer, bank and member establishment. Is it not an evidence showing bureaucratic approach of imposing too much conditions for controlling petty things? Simple exemption of Rs. one hundred per day per employee- working day may be allowed for all such expenses whether incurred at factory canteen, through caterer, re-imbursement to employee or in any other manner. Reply By Anantha as = The new FBT levy on Electronic Meal cards only and not addressed to Meal vouchers[Sodexho,Ticket etc] issued by employer.So employer can shift their scheme from issuing EMCcards to meal vouchers. Please let me know other memebers views. Dated: 31-1-2009 Re....
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....ply By Susmita as = Can you please help me knowing whether Sodexo vouchers are considered as tax free or after this ammendment it attracts FBT Dated: 30-4-2009<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....