Food allowance exemption under Section 10

Great question! Here’s a clear explanation about food allowance exemption under Section 10:

1. Is exemption applicable only to food coupons or also to cash allowances?

• Section 10(14) and Rule 2BB of Income Tax Act provide exemption on food allowance given to employees.

• The exemption is specifically for food coupons or food concession provided by the employer.

• Cash food allowance given to employees is generally taxable and not exempt under Section 10.

So, only food coupons or food concession (non-cash benefits) enjoy exemption, not cash allowances labeled as "food allowance".

2. If the employer has not mentioned food allowance in Form 16 but meal allowance is shown in payslip, can the employee claim exemption in ITR?

• If the employer has not declared the allowance as exempt in Form 16 and instead has included it in salary (taxable income), then:

  • The employee cannot claim exemption separately in the ITR on that amount.

  • The tax department expects exemptions claimed to be consistent with Form 16.

• If the amount is shown as a taxable allowance in Form 16, it will be treated as taxable income and exemption cannot be claimed independently.

Summary:

Bottom line:
If your employer hasn’t shown food allowance as exempt in Form 16, and you received a cash meal allowance, you cannot claim exemption in your ITR on that allowance.