Value of freefood and non-alcoholic beverages under section 17(2) (viii) & Rule 3(7) (iii) of Income Tax Act 1961
Every organization provides free food and non-alcoholic beverages to its employees. This can be taken as a deduction for the employer, but for an employee, it is taxable as a perquisite. Taxable amount of of perquisite would be:
The actual cost incurred by the employer
Less Amount recovered from employee
Less Rs.50 per meal is exempt.
Reference: – As Per Section 17(2) (viii) & Rule 3(7) (iii) Of the Income Tax Act 1961
3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—
(7) In terms of provisions contained in sub-clause (viii) of clause (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:
(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:
Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.