Meal Vouchers/Food coupons issued to employees

Let us take a look at the issues payroll managers need to consider while using meal vouchers / food coupons as a head of employee compensation. We will use the terms “food coupon” and “meal voucher” interchangeably in this post.


Many payroll managers mistakenly believe that food and food coupons provided to employees are entirely tax free. Food and food coupons are tax free only to a certain extent. The perquisite valuation rule (Rule 3 (7) (3) of the Income Tax Rules) governing provision of food and food coupons is as follows. You can take a look at the source by clicking here.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

The highlights of the rule stated above are as follows.

1. The value of food and non-alcoholic beverages or meal vouchers provided by the employer is exempt from income tax to the extent of Rs. 50 per meal. If the value of food and non-alcoholic beverages or meal vouchers exceeds Rs. 50 per meal, the value in excess of Rs. 50 shall be taxable.

2. “Meal” can be understood to refer to breakfast, lunch, and dinner. Rule 3(7)(iii) does not specify the maximum number of meals which can be consumed each day for availing the Rs. 50 per meal tax exemption. One or two meals per day during working hours could be considered as reasonable.

3. The tax exemption is to be calculated on a per-meal basis and not on a per-month basis. If we assume that employees can consume 2 meals each day during working hours, Rs. 50 per meal tax exemption translates into Rs. 100 tax free food coupons per working day.

4. For a meal voucher to be tax exempt to the extent of Rs. 50 per meal, the meal voucher should be used only during working hours. If an employee consumes two meals a day using meal vouchers in a working day and works for 22 days in a month (excluding holidays on say, Saturdays and Sundays), then meal vouchers can be tax exempt only to the extent of Rs. 2,200 per month (Rs. 50 per meal x 2 x 22 days). If the organization (which does not work on Saturdays and Sundays) provides meal vouchers worth Rs. 3,000 for the month, then Rs. 800 (Rs. 3,000 – Rs. 2,200) shall be taxable in the hands of the employee. Payroll managers should also exclude leave days (for e.g. casual leave and sick leave) on which employees do not work while calculating tax exemption on food coupons.

5. Meal vouchers issued to employees should be non-transferable and used only in eating joints. Since tax exemption is restricted to Rs. 50 per meal, payroll managers would do well to issue meal vouchers only in Rs. 50 (or lesser) denomination.

6. While employers cannot keep track of whether food coupons/meal vouchers are used only during working hours and only in eating joints, payroll managers should inform employees regarding the tax rule governing meal vouchers, and ask employees to adhere to the rules.

When to issue meal vouchers–beginning or end of the month?

Some organizations issue meal vouchers at the end of the month while others issue meal vouchers at the beginning of the month. We have come across a company which issues meal vouchers in advance for each quarter. You may choose to issue meal vouchers whenever you wish. However, in order to claim tax exemption, employees are supposed to use meal vouchers for consuming food during working hours. If an organization issues meal vouchers at the end of a month, it could be argued that the total amount of meal vouchers issued in that month shall be fully taxable in that month since there is no way the meal vouchers can be used by employees for consumption in that month. In such a case, tax exemption to the extent of Rs. 50 per meal, if applicable, can be claimed only in the next month.

Display in payslip

Some organizations show the value of meal vouchers on both the pay and the deduction sides of payslip while some do not. We are of the view that meal voucher–given that it is a non-cash perquisite–is to be kept out of the payslip. After all, we do not show the value of perquisites such as accommodation and car in the payslip.

Impact of loss of pay

Whether or not the value of meal vouchers issued to employees gets impacted by loss of pay shall be determined by the business rules in your organization. But please note that if loss of pay is to be applied, the value of meal vouchers should be adjusted for loss of pay in order to calculate the perquisite value of meal vouchers for taxation.

Issuance of meal vouchers in the first and last month of service

In the first and last months of an employee’s service, if the employee works less than full month, many organizations pay the corresponding value of meal vouchers by cash and tax it fully. This is because the amount payable to employee under the meal voucher head may not correspond to the meal voucher denominations available. For example, if an employee is entitled to get meal voucher to the extent of Rs. 2,000 per month and in the first/last month (a 30-day month) of service he works only for 7 days, then the value of meal vouchers to be issued to the employee for the first/last month shall be Rs. 467 after rounding off. Given that meal vouchers may not add up to Rs. 467 on account of denomination not being available, you may consider paying it out as cash in the first/last month of service.

The alternative is to issue meal vouchers for the whole month, irrespective of when an employee joins or leaves the organization, and make a cash deduction in the payroll/final settlement to the extent the employee has not worked for the month.

If you decide to issue meal vouchers in advance each month, you will have to recover the cash value, if applicable, of meal vouchers  from an employee who leaves your organization before the end of month during the final settlement calculation.

Meal vouchers as a flexi-pay component

Some organizations allow employees to switch between meal vouchers and cash as and when employees wish. While there is nothing wrong in giving the flexibility to employees, payroll managers need to take cognizance of the additional administrative effort in managing issuance of meal vouchers and keeping track of the pay structure changes when employees switch from meal vouchers to cash and vice versa.

Meal vouchers in case of arrear pay

Your organization may decide to include meal vouchers when there is a pay hike with retrospective effect. You may issue additional meal vouchers towards “meal voucher arrear” in case of a retrospective hike. But please note that the tax exemption can be availed only to the extent of Rs. 50 per meal.

Posted in: Blog

Leave a Comment (25) ↓


  1. Vinod October 30, 2013

    Excellent Knowledge Share !!

  2. Ashok Shetty April 27, 2014

    Whether any smart card is available instead of physical food coupons like ticket restaurant , sodexco coupons?

  3. kiran May 13, 2014

    fine article

  4. jiendra salvi June 14, 2016

    Good information and presentation, Can you show the which clause of IT act allows the 50 Rs. ( a snap of rulebook is appreciated) and other details explains above..

    • gautham June 14, 2016

      Please take a look at Rule 3 (Perquisite valuation rules) of the Income Tax Rules in this regard.

  5. Pragya gaur March 22, 2017

    Lunch provided by employer during office hours taxable or not

    • gautham March 22, 2017

      It is non-taxable if the value of the meal provided does not exceed Rs 50 per meal (per employee). If the value per meal exceeds Rs 50, it is taxable.

  6. Anurag March 24, 2017

    Please provide your views on following points:

    1. If the meal card or voucher is limited to be used only at eating joints, will it be tax-exempted.

    2. What if we as employer provide Rs50 per meal bit employee spends Rs200 in a single meal.

    3. If employee is provided 1250 per month and he is not able to spend that much in month, then should the remaining amount be taxed

    • gautham March 24, 2017

      1. If the meal card or voucher is limited to be used only at eating joints, will it be tax-exempted.

      ANS: Yes, it will be tax-exempt.

      2. What if we as employer provide Rs50 per meal bit employee spends Rs200 in a single meal.

      ANS: The amount beyond Rs 50, i.e. Rs 150, will be taxable. However, how would you, as the employer, get to know about this? During the normal course, there is no way an employer would get to know this.

      3. If employee is provided 1250 per month and he is not able to spend that much in month, then should the remaining amount be taxed

      ANS: Yes, to the extent it is not used, it should be taxed. Again, the question is how would the employer get to know about this.

  7. sakthi May 2, 2017

    We issue Electronic(Master card) Meal vouchers(Zeta). whether the payment from company to Zeta(service provider) attract TDS? WE assume it would attract as 194 C. But ZETA denies but it has not logical stand. Pls advice.

    • gautham May 3, 2017

      How do you say 194C is applicable here? Isn’t the voucher provider supplying you meal card for the payment the provider receives?

  8. Anita August 1, 2017

    If we want to claim this exemption while filling in the ITR1, under what section should we mention the total amount (in the financial year) of meal coupons given by the employer?

    • gautham August 5, 2017

      You have to reduce the income payable under Salary amount. However, the department will compare your return with the salary information filed by your employer and raise a query on why the salary you have declared is lower than that filed by your employer.

  9. rathi mukesh October 30, 2017

    i m recipient of food coupon allowance of Rs.1800 in my salary slip as a part of my salary, is it allowable u/s 10 if yes how?

    • gautham October 30, 2017

      There is no food coupon allowance under Section 10. If you are getting paid Rs 1,800 by way of cash (instead of Rs 1,800 worth food coupons), the amount is fully taxable.

  10. Vignesh November 29, 2017


    If food coupons are not allowed in my organization, then how to file my Food expenses? I have collected bills for the same.

    Is it possible to deduct during E-Filing, If yes – How to do that?

  11. junaid ahmed December 8, 2017

    Is food subsidy applicable for Esic contribution

    • gautham January 5, 2018

      What is the nature (periodicity etc.) of this head of pay?

  12. Vinod July 17, 2018

    I have a doubt, A company is deducting Rs. 4,000 for Sodexo Coupon from an employee. How should we provide exemption in Employee Tax Computation

    • gautham July 17, 2018

      Not sure why the coupon value is getting deducted from employee salary.

  13. Amith January 29, 2020

    Hello Sir,

    Currently, in our company the food coupon is paid only for one meal so Rs.1100 for 22days when we request the management they refer to our company auditor and he says as per the rule, its 50 per meal and the rule doesn’t say how meals can be given, so to be on safer side we will do coupons for 1 meal only so that they are no issues to company from the IT authorities, so now how can we get some government help to get a confirmation that how much a company pay in food coupon, most of my friends get 3K or 2.5K in coupons and i want to get this implemented in my company to save taxes, but they need the information in a government authorized info so they never get into any trouble.

    Please help me with a solution to this.


    • gautham January 30, 2020

      Your auditor is correct in saying that Rs 50 per meal is what can be exempted and that there is nothing specific in Income Tax Rules on how many meals per day can be covered under this. Many organizations look at Rs 100 (2 meals) per day for 22 days amounting to Rs 2200 per month.

      Your management can consider providing Rs 2200 per month in this regard.


    suppose an employee working after 8 hrs day say for 2-4 hrs extra or on sat or sun then how much meal coupon should be provided or not. If not, then if employee is getting late sitting allowance say Rs.16/km as TA and food allowance say 150.
    Whether the 150/- should be deducted from coupon amount loaded on meal card.???

    • gautham April 2, 2020

      There is nothing in law which dictates how much TA or food allowance should be paid.


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