Saying ''pass'' to taxes the Sodexho way

Mohini Bhatnagar
17 May 1999

"How do the world’s leading companies pass on perks to their employees? They Sodexho Pass them." If the punchline of the Sodexho Pass ad is a bit obscure, the plans that this organisation has for its operations in India are anything but that.

Ravi Saxena, marketing director at Sodexho, says, "We are here, and to stay," adding that the aim of the organisation is to attain the status of the parent organisation, Sodexho Alliance, the world over -- that of a leader in the service vouchers and catering business.

Sodexho passes are food coupons or vouchers that employers can offer to employees as perquisites. These passes can be used up at a number of Sodexho affiliate restaurants and outlets, at present numbering about 4,000 across India, and avail of food items. The company in turn redeems these vouchers.

Sodexho has capitalised on a Central Board of Direct Taxes rule. While food allowance is categorised as income, and is taxable under CBDT rules, "any amount of up to Rs 35 per day in the hands of an employee is not treated as an income, provided that the amount is paid by the employer directly to the service provider". Sodexho passes thus do not come under the purview of taxes.

The employer in turn can treat these passes as an expense for tax purposes. The accounting procedure is also rendered simple as a single invoice acts as genuine proof of expense, and the expenses can be booked without having to sift through piles of bills from a host of service providers. Sodexho passes are generally in denominations of Rs 35 or less, unless a company specifically seeks them in higher denominations.