The meal card tax exemption Draft Tax Rules 2026 has emerged as a major relief for salaried employees. In a significant proposal under the draft Income Tax Rules, 2026, the government has increased the tax-free limit on employer-provided meals from ₹50 per meal to ₹200 per meal. If approved by Parliament, this move can help employees save up to ₹1,05,600 annually in income tax.
This change directly benefits employees who receive meal cards or vouchers such as Sodexo, Pluxee, Zaggle, or in-office canteen meals as part of their salary structure.
What Has Changed in Draft Income Tax Rules 2026?
Under the earlier tax rules, salaried employees could claim income tax exemption only up to ₹50 per meal, which limited the overall tax benefit. The Draft Income Tax Rules 2026 propose increasing this exemption to ₹200 per meal, a four-fold jump aimed at aligning tax rules with rising food costs.
The exemption applies only to non-alcoholic meals provided during working hours through recognised meal vouchers or office canteens.
How the ₹1.05 Lakh Meal Card Tax Exemption Is Calculated
According to tax experts, the increased limit can translate into substantial annual savings.
If an employer provides:
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Two meals per working day
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₹200 per meal
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22 working days per month
The calculation works out as:
₹200 × 2 meals × 22 days × 12 months = ₹1,05,600 per year
This amount becomes completely tax-exempt, provided the employer structures it correctly within the salary package.
Who Can Benefit From This Meal Voucher Tax Exemption?
The meal card tax exemption Draft Tax Rules 2026 benefits salaried employees across income levels, including those with CTCs of ₹7 lakh, ₹13 lakh, ₹15 lakh, ₹20 lakh, or even ₹25 lakh.
Since meal vouchers are excluded from taxable salary, employees in higher tax brackets stand to gain more in absolute tax savings compared to those in lower slabs.
How Meal Card Tax Exemption Works Under Income Tax Law
As explained by tax professionals, the value of free food or non-alcoholic beverages provided by an employer is generally treated as a taxable perquisite. However, the Income Tax Act provides a specific exemption for meals, subject to prescribed limits.
Under the Draft Income Tax Rules 2026:
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Meals must be provided during working hours
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Alcohol is strictly excluded
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Cash reimbursement is not allowed
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Vouchers must be used only at food outlets
If these conditions are met, the meal card value does not form part of taxable income.
Impact on CTC and Salary Structuring
Employers can restructure the Cost to Company (CTC) by allocating a portion toward meal vouchers instead of taxable allowances. This does not increase the employer’s cost but improves the employee’s in-hand salary through tax efficiency.
For example, an employee earning ₹15 lakh annually could reduce taxable salary by ₹1.05 lakh, resulting in meaningful tax savings depending on the applicable slab.
New vs Old Tax Regime: Does the Benefit Apply to Both?
The meal card tax exemption Draft Tax Rules 2026 is expected to apply only under the old tax regime, as most exemptions and perquisites are not allowed under the new regime.
Employees opting for the old regime with deductions and exemptions will benefit the most from this change.
Why This Change Matters for Salaried Employees
This proposal reflects the government’s intent to simplify taxation while offering practical relief for everyday expenses. Rising food inflation and hybrid work models have made meal allowances more relevant than ever.
If approved, this change could become one of the most effective salary-based tax-saving tools for salaried taxpayers in FY 2026-27.
The meal card tax exemption Draft Tax Rules 2026 could be a game-changer for salaried employees looking to optimise their tax outgo legally. With a potential tax-free benefit of ₹1.05 lakh annually, meal vouchers may soon become a must-have component of salary structuring.
Employees should review their salary breakup and consult tax professionals once the rules are notified to fully leverage this benefit.
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