Government of India has issued additional regulations* in relation to the use of food cards. As per these regulations,
1. The food card should be used only for the purpose of purchasing ready-to-eat-food or non-alcoholic beverages
2. The expenditure incurred on the card cannot not exceed Rs. 100/- on any day
Though the revised rules are with retrospective effect from 1st April 2008, it is reasonable to consider their applicability on a prospective basis. Therefore, all expenses incurred on the food card on or after January 15th, 2009, and not meeting these conditions would be taxed in the hands of the employee.
Please comply with these regulations to derive the best benefits from this card.
The objective of this communication is to clarify some common queries on the new government regulations and the usage of food card.
Why the change?
The Central Government has notified the rules governing the meal card scheme on 5th January 2009. Though the rules are effective from 1st of April 2008, we are adopting the notified rules only effective 15th January 2009.
Why is the effective date mentioned as 15th Jan 2009 in the communication and not 1st April, 2009, as it appears in the rules?
Under the Income Tax parlance, the effective date refers to the assessment year, which is year following the financial year. Therefore, when the effective date mentioned is 01st April, 2009, the period it actually refers to is the year beginning 1st of April 2008. Though the rules are effective from 1st of April 2008, we are adopting the notified rules only effective 15th January 2009.
How does the change impact the usage of my food card?
This change impacts us in terms of spending patterns. We can no longer use the card for bulk purchases. We can use the card for food and beverage consumption on a daily basis. This is limited to INR 100 per day, for spending towards ready to eat food and non alcoholic beverages. This implies that we cannot use the card for purchasing anything except the ready to eat food and non alcoholic beverages.
Many of you have asked us to examine food vouchers as an alternative. It will be worth noting that in spirit the rules governing their use is similar to that of the food card. Given that the meal card is administered in the electronic form and is non-transferrable as mandated by law, it offers better compliance with the regulations and ease of use than the vouchers.
Most of the shops accept food card only for purchases above Rs. 100?
The purpose behind this ruling is to ensure that tax free reimbursements are provided towards expenses incurred against food consumption while at work. We have made sure that most / all of our internal vendors servicing our cafeterias accept the meal card. This still serves the purpose as INR 100 is a very reasonable amount that an associate can spend on food at work or otherwise per day. Our admin team is working to get all our vendors to accept the card.
With this scheme, I will not need INR 3000 per month. What do I do?
You can definitely redefine the amount you may need in the FBP definition system in Mypay to reflect an amount that lower and in synch with your spending patterns. For example, if your spending pattern indicates that you spend an average of INR 50 a day, you can define INR 1500 as food reimbursement in Mypay. The remaining amount will automatically move into the Special Allowance, which is paid post applicable taxes.
I have not spent my earlier credits and have a big balance in my Food card, what do I do with it?
As explained above, the ruling is with retroactive effect and the amount that is accumulated in your card so far has to be spent according to the new ruling. You can stop further declarations and exhaust the amount you already have on your card. The card would continue to be valid.
I don’t use the card to purchase food in canteen. So this card is useless to me.
These are personal choices. Nevertheless, this card is going to benefit a large section of our young associates who stay away from home and eat outside most of the time.
What will happen if the expenditure is not as per the regulations?
HDFC will block the card and no further use will be permitted.
Click the url and appy it after 15 days concern location admin will send you the mail
