[Opinion] Meal Voucher Tax Benefit under New Tax Regime

CA Sagar Gambhir – [2026] 185 taxmann.com 458 (Article)

From 1 April 2026, India’s tax landscape changed in a way that directly benefits millions of salaried employees. The Income Tax Act 2025 replaced the Income Tax Act 1961, and the Income Tax Rules 2026 replaced the Income Tax Rules 1962, both effective Tax Year 2026-27. Among the many changes, one stands out for its direct, immediate impact on take-home salary – the meal voucher exemption has been raised from ₹50 to ₹200 per meal and—critically—it is now explicitly available under the new tax regime without any denial or ambiguity. This article critically analyses how Rule 15(5)(a) of the Income Tax Rules 2026 resolves years of uncertainty, what the new conditions are, how to calculate the benefit correctly for Tax Year 2026-27, and whether it is worth restructuring your salary around it.

1. Key Takeaways—Quick Summary

Income Tax Rules 2026, effective from Tax Year 2026-27, replace Income Tax Rules 1962—Rule 15(5)(a) now governs meal benefit (replacing old Rule 3(7)(iii)).
The tax-free meal limit has been quadrupled from ₹50 per meal to ₹200 per meal—a first revision in over 25 years.
Maximum annual tax-free meal benefit is now ₹1,05,600 (₹200 × 2 meals × 22 working days × 12 months).
The old denial proviso that blocked meal benefits in the new regime has NOT been carried forward in IT Rules 2026—the benefit is now available under the new regime.
Conditions still apply – vouchers must be non-transferable and redeemable only at specified eating joints—cash allowances remain taxable.
At the 30% slab, this benefit now saves up to ₹31,680 per year—more than 4x the saving under the old rules.

2. What Changed on 1 April 2026? The New Legal Framework Explained

The Income Tax Act 2025 received Presidential assent and came into force on 1 April 2026. It replaces the Income Tax Act 1961 with a streamlined 536-section statute organised across 23 chapters, written in plain language with logical sequencing.

Simultaneously, the Central Board of Direct Taxes (CBDT) notified the Income Tax Rules 2026—reducing over 500 rules to just 333 rules. These rules govern perquisite valuations, allowances, forms, and procedures for Tax Year 2026-27 (April 1, 2026 to March 31, 2027) onwards.

One of the most significant practical changes in the new rules – the meal benefit valuation rule.

Old Rule – Rule 3(7)(iii) of Income Tax Rules 1962—₹50 per meal (set in 2001, never revised). Explicitly denied to new regime taxpayers via a specific proviso.

New Rule – Rule 15(5)(a) of Income Tax Rules 2026—₹200 per meal. No denial proviso for the new regime. Available under both regimes.

3. What Is Tax Year 2026–27?

Under the Income Tax Act 2025, the old two-term system (Previous Year + Assessment Year) has been replaced by a single unified concept – the TAX YEAR. Tax Year 2026-27 simply means income earned from 1 April 2026 to 31 March 2027. You earn in that Tax Year, you file your return for that Tax Year. This eliminates the previous confusion where income earned in FY 2025-26 was assessed in AY 2026-27.

Note – Returns for income earned in FY 2025-26 are still filed as AY 2026-27 under the old Income Tax Act 1961. The new Act governs Tax Year 2026-27 (from April 2026) onwards.

4. Rule 15(5)(a) of Income Tax Rules 2026—What It Says and Why It Matters

Rule 15(5)(a) of the Income Tax Rules 2026 prescribes the valuation of free food and non-alcoholic beverages provided by an employer. The key provisions are:

The value of the food perquisite is based on the actual cost to the employer.
The amount not chargeable to tax as a perquisite—i.e., the amount treated as NIL perquisite value—is ₹200 per meal (increased from ₹50 under the old Rule 3(7)(iii)).
Conditions for the ₹200 per meal benefit – meals provided during working hours in office/factory premises, OR through non-transferable paid vouchers redeemable only at specified eating outlets.
There is no proviso denying this benefit to new regime taxpayers—unlike the old Rule 3(7)(iii) which had an explicit second proviso that blocked the benefit for those opting for Section 115BAC (new regime under the old Act).

This last point is the most critical change. Under the old Act, CBDT had inserted a specific proviso into Rule 3(7)(iii) to deny the meal benefit under the new regime. That proviso does not exist in Rule 15(5)(a) of the Income Tax Rules 2026. The meal benefit is now structurally neutral—it applies regardless of which regime the taxpayer is under.