Meal vouchers at Rs 200 per meal: Who gets income tax benefit and how the ‘working hours’ rule applies

The increase in the tax-exempt limit for meals provided by employers, going from ₹50 to ₹200 per meal under Rule 15 of the Income-Tax Rules, 2026, has reopened a familiar conversation. But the focus has clearly shifted. The question is no longer whether meal vouchers work better under the old or new tax regime; rather it’s about the phrasing of the rule and what it actually permits.
At the heart of this debate is a key phrase in the rule:

“during working hours at office or business premises or through paid vouchers usable only at eating joints.”

This language reflects a clear policy intent; to exempt only those meal benefits that are intrinsically linked to working hours and subject to a monetary cap. It defines not just eligibility, but also the boundaries within which employers must operate, particularly in the context of the expanding scope of the Code on Social Security, 2020.

A shift from tax benefit to rule interpretation

Under the Income-Tax Act, 2025, salary includes perquisites, with Section 17(1)(e) covering benefits or amenities as may be prescribed. Rule 15 of the Income-Tax Rules, 2026 lays down the manner of valuation of such perquisites—and, more importantly, the conditions under which they are exempt.
The key carve-out is straightforward but conditional. Free meals (food and non-alcoholic beverages) are not treated as taxable perquisites only if:

• they are provided during working hours;
• at office or business premises, or through restricted-use meal vouchers; and
• the value does not exceed ₹200 per meal.

Unlike the earlier framework under Rule 3 of the Income-Tax Rules, 1962, where the benefit was largely viewed through the lens of tax savings under the old regime, the revised Rule 15 removes this distinction. The exemption now applies irrespective of the tax regime, subject to fulfilment of these conditions.

“During working hours”: The decisive filter

If there is one phrase that defines the scope of the benefit, it is “during working hours.” This shifts the framework in three important ways:

• the exemption becomes time-linked, not entitlement-based;
• it must serve a functional, work-related purpose; and
• it cannot logically extend to leave days, holidays, or non-working periods.

This also reframes the long-standing question: how many meals can be provided?

The rule is silent on numbers, but not on intent. The number of meals that can qualify will depend on the span of working hours, such as reporting and exit timings, extended shifts, or continued presence at the workplace due to work exigencies, including overtime.

In effect, the law builds in a reasonableness test, curbing excess without prescribing rigid limits.

Tax impact: A function of meals and marginal rates

While the structure has moved beyond pure tax arbitrage, the savings remain material. The actual tax benefit depends on the employee’s marginal tax rate (plus cess), making the benefit more valuable for those in higher tax brackets—subject, of course, to the “working hours” test being satisfied.

Assuming 22 working days a month, the maximum tax-exempt perquisite annually would be:

• One meal per day: Rs 52,800
• Two meals per day: Rs 1,05,600
• Three meals per day: Rs 1,58,400

Potential Tax Savings (including 4% cess)

Tax Slab	One Meal	Two meals	Three meals
5%	₹2,746	₹5,491	₹8,237
10%	₹5,491	₹10,982	₹16,474
15%	₹8,237	₹16,474	₹24,710
20%	₹10,982	₹21,965	₹32,947
25%	₹13,728	₹27,456	₹41,184
30%	₹16,474	₹32,947	₹49,421

₹200 per meal: A ceiling, not a commitment

The enhancement to ₹200 reflects current cost realities. However, it is important to be clear:

• it is a cap on exemption, not a statutory entitlement;
• it applies per qualifying meal, and not automatically per day; and
• employers are not obligated to provide this benefit.

Rule 15 remains enabling in nature. Whether to offer meal vouchers and how to structure them continues to be a matter of employer policy, even as market practice has made such benefits common in sectors like IT and services.

Social security code: The underlying concern

Even as the tax position seems settled, employers remain wary of the implications under the Code on Social Security, 2020.

Section 2(88) expands the definition of wages to include remuneration in kind (up to 15% of total wages). This raises a critical question: could meal vouchers inflate the wage base and, in turn, increase employer liabilities towards social security contributions, including provident fund and gratuity.

There is, however, some clarity on one front. Under the Code on Social Security (Central) Rules, 2025, the Explanation to Rule 34(2) clarifies that the value of meal vouchers shall not be included in wages for the purpose of gratuity calculation.

That said, the broader definition of wages continues to leave room for interpretational concerns, keeping employers cautious.

A principle-driven framework

The ₹200 meal exemption is a calibrated provision—not a blanket benefit and not a loophole.
Its architecture rests on three core pillars:

• Time: during working hours
• Mode: at workplace or through restricted-use vouchers
• Value: capped at ₹200 per meal

The provision does not compel employers to offer the benefit, nor does it lend itself to aggressive structuring. Instead, it supports the genuine, work-linked provisioning of meals as part of employment conditions.

As the regulatory landscape continues to evolve, the sustainability of this benefit will depend less on how it is structured and more on how faithfully it adheres to its underlying principle- serving as a work-linked welfare measure during working hours, rather than a substitute for wages.
________________________________________
The author, O.P. Yadav, is a former IRS officer with over 36 years of experience in tax administration, education, and training. He is presently working with Prosperr.io as a Tax Evangelist. The views expressed are personal.