1. Earlier Rule 3: Explicit denial of benefit
“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 in 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 benefit was available under the new tax regime from 01/04/2021 to 20/06/2023
The benefit was expressly withdrawn from 21/06/2023
2. New Rule 15: Disqualification omitted
Particulars
Rule 3
(till 31/03/2026)
Rule 15
(from 01/04/2026)
Per meal limit
Rs 50
Rs 200
Restriction for new regime
Present (from 21/06/2023)
Not present
Treatment of vouchers
Allowed within limit
Allowed within limit
3. Scope of new tax regime restrictions
4. Interpretation: Benefit available under new tax regime
The new rules do not deny the benefit under the new tax regime
The earlier disqualification clause has been consciously omitted
The provisions governing the new tax regime do not override the perquisite valuation mechanism under Rule 15
5. The legal position: No scope for alternative interpretation
The earlier proviso denying the benefit to employees under the new tax regime has not been reproduced, indicating a conscious legislative departure and a reversion to the position prevailing prior to 21st June 2023
Meal vouchers fall within the ambit of perquisite valuation rules, and not within exemptions, deductions or allowances under the Income-Tax Act, nor within any exemption or deduction for allowance or perquisite under any other law. Accordingly, the restrictions under Section 202(2) do not apply.
The Income- Tax Rules, 2026, effective April 1, have raised the tax-free limit for employer-provided meal vouchers/ cards (Sodexo/Pluxee/Zaggle, etc) from Rs 50 to Rs 200 per meal. While the enhancement is a welcome move, interpretational issues persist. The debate has largely centered on whether the benefit extends to the new tax regime.However, the controversy does not arise from any complexity in the law but from hesitation in accepting the plain language of the rule and the effect of a deliberate omission. A careful reading of the relevant provisions leads to a clear and legally sustainable conclusionUnder Rule 3(7)(iii) of the Income-Tax Rules, 1962 (since replaced by Rule 15(5)(a) of the Income-Tax Rules, 2026 with effect from 01/04/2026), the perquisite valuation framework for free food and non-alcoholic beverages provided as under:A specific restriction was introduced in the above rule with effect from June 21, 2023 through the Income-tax (Tenth Amendment) Rules, 2023, to deny the benefit in respect of paid vouchers under the new tax regime under Section 115BAC of the Income-Tax Act, 1961, as under:“Provided further that the provisions of the first proviso in respect of free food and non-alcoholic beverages provided by the employer through paid voucher shall not apply to an employee… who has exercised an option under sub-section (5) of section 115BAC…”Thus, the legal position was clear:Rule 15(5)(a) (Table IV, Sr. No. 3) of the Income-Tax Rules, 2026, effective from 1 April 2026, provides that the perquisite value of free food and non-alcoholic beverages provided by the employer shall be:“the amount of expenditure incurred by such employer as reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity”However, the above valuation is subject to the condition that the following shall not be treated as perquisites:“(a) free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers usable only at eating joints, to the extent the value thereof in either case does not exceed ₹200 per meal; or(b) tea or snacks provided during working hours; or(c) free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation”A comparison with the earlier Rule 3 clearly shows:The restriction introduced in 2023 has not been carried forward in the new rules—an omission that is both deliberate and decisive.Section 115BAC(2) of the Income-Tax Act, 1961 provides that total income under the new tax regime shall be computed without allowing specified exemptions or deductions and:“without any exemption or deduction for allowance or perquisite… provided under any other law for the time being in force”The legal framework under Section 202(2) of the Income-Tax Act, 2025, effective from 1 April 2026, remains materially the same, with only simplified language.The restrictions under both Section 115BAC(2) of the Income-Tax Act, 1961 and Section 202(2) of the Income-Tax Act, 2025 apply to exemptions, deductions and allowances under the Income-Tax Act, as well as any exemption or deduction for allowance or perquisite under any other law.However, Rule 3 of the earlier rules and Rule 15 of the new rules operate at a different stage—namely, the valuation of perquisites under the Income-Tax Act. It is for this reason that a specific restriction had to be incorporated in Rule 3 with effect from 21 June 2023 to deny the benefit under the new tax regime.Where a benefit is excluded at the stage of perquisite valuation itself, it does not form part of income and, therefore, falls outside the scope of disallowance under Section 202(2).The position that emerges is clear:It is a settled principle of law that where statutory language is clear, it must be applied as it stands. No words can be added or implied.The legal position is clear and leads to a single, sustainable conclusion:Any contrary view either ignores the omission in the new rules or seeks to read into the law what no longer exists—an approach that is untenable in tax jurisprudence.Accordingly, meal vouchers up to Rs 200 per meal during working hours are not taxable perquisites and are available under both tax regimes (old and new), subject to fulfilment of conditions prescribed under Rule 15 of the Income-Tax Rules, 2026, which remain materially aligned with Rule 3(7) of the earlier rules.The author, O.P. Yadav, is a former IRS officer with over 36 years of experience in tax administration, education, and training. The views expressed are personal and based on the law as it exists on the date of publication. He now works as a Tax Evangelist at Propsper.io.