Tax on food coupon encashed
This query is : Resolved
26 December 2012
Hi Ours is Ltd Co. if cash in place of food coupon given by company, TDS applicable? Is it like canteen allowance.
26 December 2012
Yes, in my view this is taxable as part of salary u/s 17.
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26 December 2012
Is there any restriction upto which amount co can give food coupon?
26 December 2012
Kindly refer to Rule 3 (7)(iii) of the Income Tax Rules.
Generally, the amt spent on free food is taxable in employees hands. Following are exceptions
a) if free food is provided during office hrs at office or business premises of employer OR
b) if paid thru non-transferable paid vouchers & usable only at eating joints
where value of each does not exceed Rs 50/-per meal.
Generally, the amt spent on free food is taxable in employees hands. Following are exceptions
a) if free food is provided during office hrs at office or business premises of employer OR
b) if paid thru non-transferable paid vouchers & usable only at eating joints
where value of each does not exceed Rs 50/-per meal.
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27 December 2012
If co give Rs.2500 p.m. food coupon which paid thru non-transferable vouchers & usable only at eating joints. This full Rs.2500 not taxable?
26 July 2025
You're asking a good question — and it's one that affects **many salaried employees**. Let's break this down clearly:
---
## 💡 **Question**:
> If a company gives **₹2,500/month** as food coupons (paid via **non-transferable vouchers**, usable only at eating joints), is the **full ₹2,500** taxable or partly exempt?
---
## ✅ **Relevant Provision**:
As per **Rule 3(7)(iii)** of the **Income Tax Rules**, the **value of free food** or **meal vouchers** provided by an employer is **not taxable**, if:
* It is provided **during working hours**, and
* It is in the form of **non-transferable paid vouchers**, and
* It is **usable only at eateries/eating joints**, and
* The **value does not exceed ₹50 per meal**.
---
## 🔍 What this Means Practically:
* **Exempt Limit = ₹50 per meal**
* Assuming **2 meals per working day**, and **22 working days/month**, max exempt value:
👉 ₹50 × 2 meals × 22 days = ₹2,200 per month (maximum tax-free)
---
## 🧾 So, for ₹2,500/month:
* **₹2,200/month** is **exempt**
* **₹300/month** is **taxable** as **perquisite (part of salary)** under **Section 17(2)**
---
## ⚠️ Important Conditions:
To claim exemption:
* Vouchers must be **non-transferable**
* Can be used **only at eating joints**
* Cannot be **encashed** or used for other purposes
---
## 🚫 What if company **gives cash instead of vouchers**?
* **Entire amount is taxable** as salary (like **canteen allowance**)
* No exemption under Rule 3(7)(iii)
---
## ✅ Summary Table:
| Situation | Taxability |
| ------------------------------------------- | ------------------------- |
| Meal vouchers (non-transferable, ≤₹50/meal) | **Exempt** up to ₹50/meal |
| Meal vouchers > ₹50/meal | **Excess is taxable** |
| Meal vouchers encashed (paid in cash) | **Fully taxable** |
| Food provided at office (within limits) | **Exempt** |
---
Let me know if you want a **calculator** to split **taxable vs exempt** meal allowance or need a **template for payroll TDS treatment**.
---
## 💡 **Question**:
> If a company gives **₹2,500/month** as food coupons (paid via **non-transferable vouchers**, usable only at eating joints), is the **full ₹2,500** taxable or partly exempt?
---
## ✅ **Relevant Provision**:
As per **Rule 3(7)(iii)** of the **Income Tax Rules**, the **value of free food** or **meal vouchers** provided by an employer is **not taxable**, if:
* It is provided **during working hours**, and
* It is in the form of **non-transferable paid vouchers**, and
* It is **usable only at eateries/eating joints**, and
* The **value does not exceed ₹50 per meal**.
---
## 🔍 What this Means Practically:
* **Exempt Limit = ₹50 per meal**
* Assuming **2 meals per working day**, and **22 working days/month**, max exempt value:
👉 ₹50 × 2 meals × 22 days = ₹2,200 per month (maximum tax-free)
---
## 🧾 So, for ₹2,500/month:
* **₹2,200/month** is **exempt**
* **₹300/month** is **taxable** as **perquisite (part of salary)** under **Section 17(2)**
---
## ⚠️ Important Conditions:
To claim exemption:
* Vouchers must be **non-transferable**
* Can be used **only at eating joints**
* Cannot be **encashed** or used for other purposes
---
## 🚫 What if company **gives cash instead of vouchers**?
* **Entire amount is taxable** as salary (like **canteen allowance**)
* No exemption under Rule 3(7)(iii)
---
## ✅ Summary Table:
| Situation | Taxability |
| ------------------------------------------- | ------------------------- |
| Meal vouchers (non-transferable, ≤₹50/meal) | **Exempt** up to ₹50/meal |
| Meal vouchers > ₹50/meal | **Excess is taxable** |
| Meal vouchers encashed (paid in cash) | **Fully taxable** |
| Food provided at office (within limits) | **Exempt** |
---
Let me know if you want a **calculator** to split **taxable vs exempt** meal allowance or need a **template for payroll TDS treatment**.
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