Salary & compensation · Updated October 2026
A food allowance paid in cash is fully taxable, while meals the employer provides at work, or through non-transferable meal vouchers, are tax free up to a per-meal limit. Under Rule 15 of the Income-tax Rules, 2026 the limit is Rs 200 per meal from FY 2026-27, up from Rs 50, and secondary sources report it now applies in the new regime too. It is a perquisite valuation rule, not an allowance exemption.
| Form | Tax treatment |
|---|---|
| Cash food allowance in the salary | Taxable salary in both regimes |
| Free food or non-alcoholic drinks at the office during working hours | Not taxed up to Rs 200 per meal |
| Paid meal vouchers or a meal card, redeemable only at eating outlets and not transferable or encashable | Not taxed up to Rs 200 per meal |
| Value above the per-meal limit | The excess is a taxable perquisite |
What makes this different from other allowances is that the benefit has to be a meal, not money. The moment a card can be withdrawn as cash or passed to someone else, it looks like pay. The old rule was widely described as unavailable in the new regime; reports on the 2026 Rules say that restriction was not carried forward, but the notified text is the thing to check before you rely on it. A broader view of how benefits are valued sits in perquisite valuation.
Tax summaries usually illustrate with two meals on each of 22 working days: Rs 200 x 2 x 22 = Rs 8,800 a month, or Rs 1,05,600 a year. That is the ceiling, not a target. The test is the number of meals actually provided in a month, so a card loaded with Rs 9,000 for a person who works from home half the month is harder to defend. Mid-month joiners and leave also matter, so most payroll tools prorate the load. Pair this with how your salary breakup shows the component, since employees often see it as a deduction from take-home until it is explained.
A cash food allowance is taxable. A genuine meal benefit up to Rs 200 per meal is reported to be tax free in the new regime from FY 2026-27 under the revised Rule 15.
The exemption is for meals provided at the office or through vouchers usable at eating outlets. A cash payment for groceries or home meals is not covered.
FY 2025-26 and earlier, which is what returns being filed now use. See TDS on salary for how the employer applies the rule during the year.
Check the in-hand effect of moving a cash allowance into meal vouchers in the Take-Home Salary Calculator.