Food coupons in India: Understanding the tax exemption on them

One of the popular tax breaks that are allowed under the Income Tax Act are the food coupons or meal vouchers.

Food coupons or meal vouchers are tax exempt up to a limit of Rs 50 per meal. Such a meal voucher issued by a company to its employee should be used only during working hours and is restricted to two meals per day.

This works to Rs 100 per working day, as it's generally assumed that an individual would have two meals during a working day.

Let's assume that if an employee consumes two meals a day using meal vouchers in a working day and works for 25 days in a month, then meal vouchers can be tax exempt only to the extent of Rs 2,500 per month (Rs. 50 per meal x 2 x 25 days).

Now meal can be either breakfast, lunch or dinner. It's also important to note that the meal vouchers issued to employees are non-transferable and should be used at restaurants and other eateries.

A lot of retail outlets now accept food coupons as payment for groceries. Here are a few lines directly taken from the Income Tax Act, which covers provisions relating to food coupons or meal vouchers.

"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."

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