Everyone might have heard the hype regarding not accepting food coupons in many popular retail stores.
Why food coupons are widely used?
There is a tax exemption on the food coupons the employees opts for in an organization. But the amount of coupons for which tax is empted is limited (3000 / month mostly).
Now let us try to answer a question. Are food coupons really helpful?
The cycle of food coupons
The organization which issues coupons (sodexo or any other Edenred ) gets a compensation or more food coupons for lesser monetary value. Say for example 1010 worth coupons for 1000/- . The employee will be given 1000 worth coupons instead of 1000 INR. The tax exemption is 100 (10%). The employee pays in a retail store for his groceries. The grocery store claims 1000 INR, but will be paid 980 INR (it is just an example). In this cycle, who is losing? The upper layer shows everything is transparent and consumer is not affected. But let us flip the coin and look the other side.
We used to shop at the nearest grocery stores and the markets where the ambience and presentation might not be taken care of. But the cost of items is reasonable and quality is good. These are the places where the rural of India strives for their livelihood. Now as we opt for food coupons for tax exemptions, we shop at retail stores which will mark the goods at a higher price (keeping in mind the return for coupons). I don’t deny the fact that the retail stores provide employment, but coupons ensure that consumers throng retail stores even for small things leaving behind the traditional stores.
The retail stores can survive without coupons and at the same time small businesses can survive.
Can’t the government give a tax exemption for 36000/ year? Doesn’t a common household expenditure on food be 3000/month?
What help does parallel money do for our country?
Does government make bills for common man?
The above questions are left unanswered..
