Tax Rules on Food and Meal Vouchers in India
Under Rule 3(7)(iii) of the Income Tax Rules, 1962, free food and non-alcoholic beverages provided by an employer are classified as a perquisite. However, the rule contains specific statutory exemptions designed to support employee workplace nutrition.
The ₹50 Per Meal Exemption Rule
Prepaid food cards (such as Sodexo, Pluxee, Zaggle, or corporate cafeteria passes) that are non-transferable and usable exclusively at eating joints or food stores are tax-exempt up to ₹50 per meal during working hours:
- For standard full-time employment with 2 meals per working day (Lunch and Refreshment/Dinner):
Daily Exemption = 2 meals × ₹50 = ₹100 / day - Assuming 22 working days in a calendar month:
Monthly Tax Exemption = 22 days × ₹100 = ₹2,200 / month (₹26,400 / year) - Any allowance or voucher amount paid in excess of ₹50 per meal is added to taxable salary as a perquisite.
Old Tax Regime vs New Tax Regime (Section 115BAC)
Under the New Tax Regime (Section 115BAC), the CBDT withdrew the meal voucher tax exemption. In the New Regime, any food card credit or meal allowance provided by the employer is 100% taxable as salary income. Employees aiming to utilize meal coupons for tax savings must elect the Old Tax Regime.
Frequently Asked Questions (FAQs)
1. Can food coupons be used to purchase groceries?
Yes. Non-transferable digital meal cards can be used at grocery stores, supermarkets, and food delivery platforms to purchase food and non-alcoholic beverages without losing tax exemption.
2. Is tea and coffee provided at the office taxable?
No. Proviso to Rule 3(7)(iii) explicitly states that free tea, coffee, and light refreshments provided during office working hours are completely tax-free without any monetary limit.
Statutory Authority: Rule 3(7)(iii), Income Tax Rules, 1962 / Income Tax Rules 2026 and CBDT Circular No. 20/2020.