If you are someone who gets meal coupons from your office canteen, then you will be able to save Rs 1 lakh under the new tax rules. Effective from April 1, new tax rules will significantly enhance the tax relief available on employer-provided meals for salaried individuals.
Under the Income Tax Rules, 2026, the exemption limit per meal has been increased to Rs 200, up from the earlier Rs 50 cap, approved last week by Parliament.
This change means that employees who receive benefits such as meal coupons, prepaid cards like Pluxee, Sodexo, or Zaggle, or subsidised office canteen food can now exclude a much larger portion of these perks from their taxable income. Earlier, only Rs 100 per day (two meals) qualified for exemption. With the revised ceiling, the tax-free amount can go up to Rs 400 per day.
Over time, this adds up to a substantial benefit. Assuming 22 working days a month, the exemption can reach Rs 8,800 monthly and Rs 1,05,600 annually, effectively increasing take-home pay.
Rs 200 × 2 meals = Rs 400 per day
Rs 400 × 22 working days = Rs 8,800 per month
Rs 8,800 × 12 months = Rs 1,05,600 per year
However, this higher exemption is available only under the old tax regime, which allows taxpayers to claim deductions and exemptions. The new tax regime will continue to be the default from April 2026, so employees will need to opt into the old regime if they wish to claim such benefits.
Alongside this shift, companies are increasingly replacing cash allowances with structured benefits like fuel cards and corporate expense cards. These tools not only help track spending more efficiently but also offer tax advantages when used for official purposes.
For instance, a monthly travel allowance of Rs 20,000 paid in cash is fully taxable. In contrast, if the same amount is reimbursed through a fuel card for work-related travel, with proper documentation, it may remain tax-exempt, reducing the employee's overall tax burden.