In the world of salary structures and exemptions, meal benefits often get overlooked. Most employees don’t even ask how meal coupons, food allowances, or digital meal cards are taxed — they simply use whatever HR provides. But understanding this can actually help you claim more tax savings.
Under the Income Tax Act, meal exemptions are primarily covered under Section 10(14) (as an allowance) & Section 17(2)(viii) read with Rule 3(7)(iii) (as a perquisite). These provisions explain when meals are tax-free, when they turn taxable, and how employers can structure them smartly.
Meal Exemption in Income Tax: The Big Picture
Meal benefits can come in three common forms:
- Free meals in office
- Meal coupons (paper or digital)
- Food allowance
Each one has its own tax treatment.
Under the rules, the tax-free part is quite specific:
- Meal coupons up to ₹50 per meal are tax exempted"
- Free meal cards are taxable if the amount spent per meal exceeds ₹50
- Food allowance can be provided to employees which is entirely tax-free (subject to meal rules & limits)
Let’s unpack these with examples that feel relatable.
Also Read: Tax-Free Allowances for Work-Related Expenses
Section 10(14): Meal Allowance as an Exempt Allowance
Many companies prefer giving a food or meal allowance. This is treated under Section 10(14), which covers special allowances given to employees for performance of duties.
If an employer provides a structured meal allowance:
- It becomes a part of your salary
- It can be completely tax-free if given in the form of food/meals, not cash
This is where some employees get confused. A “food allowance” paid in cash is taxable. But when the employer provides the allowance through meals or coupons, it qualifies for exemption.
A quick real-life example
I once saw a colleague negotiate her CTC. She simply asked the HR team to convert a part of her basic salary into a meal allowance.
The result?
Her monthly take-home increased — without the company spending a rupee more.
Section 17(2)(viii): Meal Benefits as Perquisites
(Read with Rule 3(7)(iii))
This part covers free meals, subsidized meals, and digital meal cards provided by the employer.
According to Rule 3(7)(iii):
- Meals provided by the employer are exempt up to ₹50 per meal
- Anything above ₹50 per meal becomes taxable as a perquisite
This applies to:
- Canteen meals
- Meal vouchers
- Meal cards
- Digital food wallets
- On-site meals provided during office hours
Why ₹50 per meal?
It may feel small today, but the exemption has remained unchanged for years. HR departments are aware of this & often structure meal plans carefully to stay within the limit.
Free Meal Cards: When They Become Taxable
Digital meal cards are popular now, especially with hybrid work. But here’s the catch:
- Free meal cards are taxable if the amount spent per meal exceeds Rs.50
So if your employer loads ₹120 per meal on your card, only ₹50 stays tax-free. ₹70 becomes taxable income.
Employees often don’t notice this, but it shows up clearly in the Form 16.
Also Read: Perquisites in Salary: What Employees Must Know
How Employers Usually Structure Meal Benefits
A lot of companies use meal benefits creatively to increase tax-free salary components.
Popular methods include:
- Subsidized canteen meals
- ₹50 per meal digital coupons
- Prepaid food cards
- Shift-meal allowances for employees working late hours
- Meal benefits for travel or field work
When structured properly, the entire value becomes tax-efficient.
When Are Meals Fully Tax-Free?
Not many people know this, but the ₹50 limit does not apply to certain situations.
Meals are fully exempt when:
- Provided during working hours in office premises
- Provided during business travel
- Provided in remote areas or offshore locations
- Provided during shift operations, night shifts, or overtime
This is one of those rules that genuinely makes sense — if the employee cannot arrange food themselves, the law doesn’t penalise them.
Understanding Meal Coupons: The Old Favourite
Meal coupons like Sodexo or Ticket Restaurant were once extremely popular. Today, most of them are digital.
The rule remains the same:
- Meal coupons up to ₹50 per meal are tax exempted
- Coupons must be non-transferable
- They must be usable only for food items
Even though coupons feel small, over a year the tax savings can add up nicely.
Also Read: Taxability of Rent-Free Accommodation Provided by Employer
Benefits of Meal Exemption — For Both Employers & Employees
1. Better Take-Home Salary: Employees keep more income without increasing company cost.
2. Easy to Administer: Digital systems make loading meal balances simple.
3. Cleaner Payroll Structure: It improves tax efficiency in CTC breakdowns.
4. Helps During Long Office Hours: Meals aren’t just tax tools — they’re practical support during busy days.
Common Mistakes People Make
- Confusing Cash Allowance with Meal Allowance
- Cash allowance is taxable. Meal benefit is not.
- Assuming Total Food Card Value Is Tax-Free
- Only ₹50 per meal qualifies.
- Not Tracking Meal Count
- The exemption is calculated per meal — not per day or month."
- Using Meal Cards for Non-Food Items
- This invalidates the exemption.
Small misunderstandings often cause surprises at year-end.
Quick Checklist for Employers
Before finalising payroll:
- Are meal benefits structured under the right section?
- Are you staying within the ₹50 per meal rule?
- Are meals non-cash & non-transferable?
- Are records or digital logs maintained?
This small checklist keeps you fully compliant.
Also Read: Medical Bills Exemption Under Section 17(2) – What’s Still Claimable in 2025?
Conclusion
Meal benefits may look like a tiny part of your salary, but they play a surprisingly meaningful role in tax planning. Whether provided through allowances, canteen meals, or digital coupons, the tax rules are simple once you understand them. And the key takeaway is clear: meal exemptions are primarily covered under Section 10(14) and Section 17(2)(viii) read with Rule 3(7)(iii), with ₹50 per meal forming the core exemption limit.
If you ever need help structuring your salary, managing payroll, or understanding exemptions better, the experts at CallMyCA.com are always ready to guide you with clarity & care.
