Get up to Rs 1.05 lakh income tax exemption on meal cards:
Draft tax rules 2026 boost salaried savings
Synopsis
Salaried employees stand to gain significantly from proposed tax rule changes. Under draft Income Tax Rules, 2026, the annual tax exemption for meal vouchers like Pluxee or Sodexo could rise to Rs 1,05,600. This is a substantial increase from the current Rs 26,400 limit. The new rules propose a Rs 200 per meal cap, potentially boosting employee savings.
To prevent taxing minor perks, the Income Tax Act grants limited tax exemption for meal coupon, meal vouchers, Sodexo (Pluxxe) food cards, or subsidised food provided by employers to their employees. Earlier the tax exemption was up to Rs 50 per meal which meant that if your employer had given you two meals a day worth Rs 50 each (total Rs 100) then the said money was not liable for income tax. The draft tax rules, 2026 has increased this amount to Rs 200 per meal.
The draft Income Tax Rules, 2026 has introduced a great benefit for salaried employees who receive subsidised meals through their office canteens or meal vouchers like Sodexo /Pluxxe, Zaggle). While the jump from Rs 50 to Rs 200 may not seem huge, calculations indicate that employees could potentially receive up to Rs 1,05,600/year in tax exemptions annually if the parliament approves the new Rs 200 cap.
Under the old tax regime, this tax benefit for meal coupon, vouchers, etc is available. However, the draft tax rules pertain only to the valuation of perks. The availability of such tax benefits under the new tax regime will depend upon how the Government finally amends the Income-tax Act and rules and issues the relevant notifications.
Read below to know how this Rs 1.05 lakh tax exemption can work for CTC of Rs 7 lakh, Rs 13 lakh, Rsa 15 lakh, Rs 20 lakh, Rs 25 lakh.
How salaried employees can get up to Rs 1,05,600 tax exemption?
Shubham Jain, Director, SVAS Business Advisors, said to ET Wealth Online that according to the draft Income-tax Rules 2026, employers can issue meal vouchers that can be used at eating outlets for up to Rs 200 per meal. If an employer provides two meals each working day, the benefit works out as follows:
Rs 200 × 2 meals = Rs 400 per day
Rs 400 × 22 working days = Rs 8,800 per month
Rs 8,800 × 12 months = Rs 1,05,600 per year
Jain from SVAS Business Advisors says: “So, a tax-free meal benefit of up to Rs 1,05,600 per year is allowed under the proposed rules.”
How does the tax exemption for meals work?
Gaurav Jain, Partner, Direct Tax, Forvis Mazars in India, said to ET Wealth Online that on a prospective basis, if the draft tax rules, 2026 is passed by Parliament, the taxexempt limit shall be as under: Rs 200 per meal × typically 2 meals/day × 22 working days = Rs 8,800/month or Rs 1,05,600/year.
Jain from Forvis Mazars in India says that employees will save tax on the increased amount exempted from perquisites.
Current exemption: Rs 26,400 per year (Rs 50 per meal)
Proposed exemption: Rs 1,05,600 per year (Rs 200 per meal)
Higher incremental tax exemption: Rs 1,05,600 − Rs 26,400 = Rs 79,200 per year
This means if you fall in the 30% slab rate bracket, then you can potentially save about Rs 24,710 tax.
According to Jain from Forvis Mazars in India, if your taxable income is reduced by this additional Rs 79,200 then in a 30% tax slab bracket (plus cess @ 4%)= 31.2% the calculations are→ Tax on Rs 79,200= 79,200 * 31.2% = Rs 24,710 (approximate). In lower slabs, savings will be proportionately lower.
How this tax exemption can work for CTC of Rs 7 lakh, 13 lakh, 15 lakh, 20 lakh, 25 lakh
Solely claiming meal voucher, card, coupon tax exemption cannot result in higher tax savings under old tax regime. But combining this meal coupon/voucher/ Sodexo (Pluxxe) tax benefit provision with other tax deductions like 80C, 80D, etc can result in higher tax savings.
Here’s a table which shows the tax exemption calculations for different CTC levels:
Source: SVAS Business Advisors
Jain from Forvis Mazars in India says that this tax benefit shall not apply in the following cases:
• Free food and non-alcoholic beverages provided by the employer during working hours at the office or business premises, or through paid vouchers usable only at eating joints, to the extent the value thereof, in either case, does not exceed Rs 200 per meal;
• Tea or snacks provided during working hours; or
• Free food and non-alcoholic beverages provided during working hours in a remote area or at an off-shore installation.
Dr. Raj P. Narayanam, Founder & Executive Chairman, Zaggle, said to ET Wealth Online: “The recent tax reforms are a clear signal that India is moving toward a more structured and transparent benefits ecosystem. By expanding tax-efficient allowances across meal, mobility and lifestyle categories, the government has created room for organisations to enhance employee take-home value without proportionately increasing fixed costs.”
Is the meal card benefit available for both the old and new tax regimes?
According to Jain from Forvis Mazars in India, the current stand is:
Under the old regime: Meal vouchers are exempt from tax up to Rs 200 per meal if the draft tax rules, 2026 are accepted as it is.
Under the new tax regime: The benefit is available under the draft rules, as the drafted version does not specifically deny it. However, since the new tax regime generally excludes perquisite exemptions, there remains a possibility that the final Bill, once passed by Parliament, may include a provision denying this benefit.
Jain from Forvis Mazars in India explains:
A. Under Income Tax Act, 1961 with Income Tax Rules, 1962
Old Tax Regime: Yes, the meal voucher tax exemption under Section 17(2)(viii)/ Rule 3(7)(iii) has traditionally applied to perquisites in salary, so it benefits salaried employees.
New tax regime (section 115BAC):
As per the second proviso to Rule 3(7)(iii), the benefit of the first proviso, which provides for the exemption/deduction, is not available to an assessee who has exercised the option under sub-Section (5) of Section 115BAC or whose income is chargeable to tax under Subsection (1A) of Section 115BAC.
Same proviso is reproduced here:
“Provided further that the provisions of the first proviso in respect of free food and nonalcoholic beverage provided by the employer through paid voucher shall not apply to an employee, being an assessee, who has exercised an option under sub-section (5) of Section 115BAC or whose income is chargeable to tax under sub-Section (1A) of Section 115BAC.”
Under the new tax regime, most traditional exemptions and deductions, including several perquisite-related exemptions, are not available.
Accordingly, as per the provisions of the Income-tax Act, 1961, the exemption in respect of meal vouchers does not apply under the new tax regime, and such benefits become taxable where the assessee opts for the new regime.
B. Under Income Tax Act, 2025 with drafted rules:
However, the draft rules pertain only to the valuation of perks. The availability of such benefits under the new tax regime will depend upon how the Government finally amends the Income-tax Act and issues the relevant notifications.
Notably, in the draft version, there is no proviso denying such benefit to persons who have exercised the option under Section 202.
[The Economic Times]
