Food Coupon allowance can be given by the employer during working hours or through pre-paid food vouchers/coupons which they can use in designated canteens etc.
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Food Coupons
- One of the favored tax breaks that are allowed under the tax Act is food coupons or meal vouchers.
- Food coupons or meal vouchers are limited to an exemption of Rs 50 per meal.
- Such a meal voucher issued by an organization to its employee should be used only during working hours and is restricted to 2 meals per day.
- This works to Rs 100 per working day, as it’s generally assumed that a person would have two meals during a working day.
Example of Food Coupon Allowance
- Let’s think that if an employee consumes two meals a day using meal vouchers during a working day and works for 25 days during a month.
- Then meal vouchers are often tax-exempt only to the extent of Rs 2,500 per month (Rs. 50 per meal x 2 x 25 days).
- Now meals are often either breakfast, lunch, or dinner.
- It is also important to note that the meal vouchers issued to employees are non-transferable and can be used at restaurants and other eateries.
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FY 2020-21 impact on Income Tax Act of Food Coupon Allowance
- Under the new tax regime effective FY 2020-21, an employee can no longer claim an exemption for Food Coupons given as a paid vouchers.
- The exemption value of Food Coupons/Meal Vouchers is ₹50 per meal under the new tax regime.
- Provided that nothing contained during this clause shall apply to free food and non-alcoholic beverages.
- Provided by such employer during working hours at the office or business property or through paid tokens which are not transferable and usable only at eating joints.
- To the extent the price thereof either case doesn’t exceed fifty rupees per meal or to tea or snacks provided during working hours.
- The free food and non-alcoholic beverages during working hours provided during a far-off area or an off-shore installation.”
