In a move that could ease the tax burden on urban salaried professionals, the Draft Income Tax Rules 2026 propose a significant revision to the tax treatment of employer-provided meal benefits.
At present, if the value of employer-provided meals exceeds ₹50 per meal (or ₹100 per day), the excess amount is treated as taxable income under existing income tax rules. However, the draft rules for 2026 could change this substantially. These proposed changes are part of a broader effort to modernise India’s individual taxation framework, aligning it with evolving salary structures that increasingly include meal cards, vouchers, and prepaid food allowances.
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What the Proposed Meal Card Tax Benefit Entails
Under current tax rules, employer-provided meals are treated as taxable perquisites if their value exceeds ₹50 per meal. Any amount above this threshold becomes part of an employee’s taxable income, increasing overall tax liability. The Draft Income Tax Rules, 2026 propose raising the per-meal exemption limit from ₹50 to ₹200 per meal for food or non-alcoholic beverages provided by employers to employees.
If implemented, this could significantly reduce taxable income for employees who receive structured meal benefits as part of their salary package.
How the Math Works
If an employee receives two meals per working day under the proposed limit:
- ₹200 × 2 meals per day = ₹400 per day
- ₹400 × 22 working days per month = ₹8,800 per month
- ₹8,800 × 12 months = ₹1,05,600 per year
This means employees could receive up to ₹1,05,600 annually in tax-free meal benefits under the draft proposal.
Who Stands to Benefit the Most?
The proposed revision could have the greatest impact on salaried employees in corporate sectors where meal cards, vouchers, or subsidised food benefits are commonly included in compensation packages.
Such benefits are widely used by companies as part of employee welfare and structured salary planning. Employees with mid-to-high salary packages who currently utilise meal card benefits may see noticeable reductions in taxable income if the proposal becomes law.
Current Status of the Draft Rules
The draft regulations have been released for public feedback and consultation.
If approved without major changes:
- Parliament could formalise the revised exemption into law
- Employers and payroll teams would need to update compliance systems
- Tax filing software and ITR forms may be revised before FY 2026-27
However, until the draft rules are officially notified and passed, they remain proposals and may still undergo modifications.
Final Word — Impact on Take-Home Pay and Tax Planning
If implemented, the proposed increase in meal card tax exemption could:
- Increase employees’ take-home income
- Encourage better salary structuring through tax-efficient benefits
- Provide measurable relief for salaried individuals receiving food allowances
For many middle-class and corporate professionals, this could translate into meaningful annual savings at the time of income tax filing, helping offset rising living costs.
