Sodexho
Eat up. That's what Indian companies are asking their employees to do. And reaping the benefits is Sodexho Pass Services India, a subsidiary of the €11.9-billion French multinational Sodexho Alliance. Corporates without having canteen or lunch facilities also subscribe to meal vouchers and give them to employees. These vouchers are redeemed by employees in restaurants, cafes and pizzerias affiliated to Sodexho in over 150 cities in India.
How it
benefits to employees
The governments of countries around the world have offered tax concession like Sodexho to the working class wherein the employers can give a benefit to their employees through a Voucher that can be used for the specific purpose it is issued and there is proof of genuineness of expenditure.
There are very few tax breaks that the Indian government has allowed its working class and Meal Voucher is one such benefit. If this benefit was paid in cash as an allowance, it would attract tax of up to 33.6%.
The intention of giving a Voucher is that the benefit will be rightly used and the benefit is intangible. Otherwise it would be just another component or allowance in an employee's salary and have no meaning whatever you called it. Let’s thank the Government of India for keeping it tax-free and we hope that in the interests of the salaried class like us, it will remain.
If someone like me who stays away from family and spend most of the time eating out, it’s a blessing for me. I save tax as well as my daily needs for food are taken care off.
The governments of countries around the world have offered tax concession like Sodexho to the working class wherein the employers can give a benefit to their employees through a Voucher that can be used for the specific purpose it is issued and there is proof of genuineness of expenditure.
There are very few tax breaks that the Indian government has allowed its working class and Meal Voucher is one such benefit. If this benefit was paid in cash as an allowance, it would attract tax of up to 33.6%.
The intention of giving a Voucher is that the benefit will be rightly used and the benefit is intangible. Otherwise it would be just another component or allowance in an employee's salary and have no meaning whatever you called it. Let’s thank the Government of India for keeping it tax-free and we hope that in the interests of the salaried class like us, it will remain.
If someone like me who stays away from family and spend most of the time eating out, it’s a blessing for me. I save tax as well as my daily needs for food are taken care off.
How
Sodexho works
Since the companies cannot go hunting to each itsy-bitsy shop where their employee is buying idly-dosa, so they hired Sodexho. They take money from the Companies and pays to outlet. Meal Passes received by the shop ensures that one of the Pass holders did visit them for Food. Sodexho is working just as an agent to pick money from one site and deliver at other.
When you take that Sodexho coupon from your employer and pay using that in the shop/restaurant, the owner of that business gives it back to the Sodexho Company and they give him cash after holding some 4.5 - 7.5% as commission. Sodexho earns in terms of the commission.
The shop/restaurant earns in terms of the additional business they are getting from you. You earn in terms of tax that you will save. Shops/restaurants earn from the product makers. They get the share in the profit of the product manufacturer.
See assume you have 3 restaurants nearby to you and you get have Sodexho coupons which you would like to use. Then you will go to the restaurant where they accept. So in that case that restaurant earns as compared to other restaurants. So they need to share the profits by receiving money at a discount while exchanging the coupon with the company.
Business
behind Sodexho
Sodexho (also Accor) guys are making lot of money by
1. Earning interest for the period by which a cycle (from Sodexho-company-employee-shop-Sodexho).
2. Unclaimed/Expired/Lost/Destroyed Sodexho.
3. The charge which they reduce while making a reimbursement to shop fellows. Sodexho also wanted them to pay for being listed with them.
Their costs are just to print and maintain a back office. There are not many players in the market as it requires lot of initial investment to get the permission from Government. The impression is that Sodexho and Accor (Accor is another Company offering meal pass services in India) are making easy money by printing a parallel currency and using others' money to fund their business.
Employer loses - 5%
Shoppers loses - 5%
Individual gains - 30%
(by saving tax) ss
Individual loses - 5% (average)
(by paying MRP for the items)
Sodexho gains - 10%
Here individual means employees and most of the employees who is availing this is from IT. The company's net income increased to $609 million from $553 million in the previous year. Revenues for the year grew to $21.7 billion from $20.58 billion a year earlier. Restaurateurs list their name with them with the hope of bringing more customers to their shop. If the Corporates start issuing Sodexho passes to their employees they should have visit one of these listed restaurants’ and they have no other choices to have their food anywhere.
Final word
A lot of manufacturing companies that were till now giving cash allowances to their workers have converted it to Vouchers. I think it’s a good system through which people can have meal benefit. And at the same time, it’s sad that we are allowing a multinational to print currency like this! Why a multinational be allowed to hold the money in the name of tax saving there by floating a parallel currency of some form, where as the government can give a tax exemption directly on the equivalent amount to employees. So Sodexho is a currency with an expiry date!!!
-Fredrick Braiman A.
