Food Coupon in New Tax Regime: What Changed for Employers in FY 2026-27

A food coupon in the new tax regime is tax-free for the employee up to ₹200 per meal from 1 April 2026, the start of FY 2026-27. That is four times the old ₹50 limit, and the rule no longer blocks new-regime employees. Cash food allowances stay fully taxable, so how you deliver the benefit matters.

Six months into FY 2026-27, payroll is already running on the new Income-tax Rules, 2026. Many employers built their meal benefits years ago, when a food coupon in the new tax regime was worth nothing to employees. If your last review of meal coupons was in 2023 or earlier, it is worth another look. Salary structures, payroll settings and cafeteria subsidies made for that world may no longer fit.

This guide is for HR, payroll and finance heads. It explains what changed, which meals and coupons qualify, and how cash, meal cards and cafeteria subsidies compare. You will also find a worked example with real numbers, so you can judge what the change is worth to your people. It ends with a checklist you can hand to your payroll team. The rule details come from the notified Income-tax Rules, 2026 as reported by tax and advisory sources. Check your own setup with your chartered accountant before you change salary structures.

Key takeaways

• From 1 April 2026, employer-provided meals and non-transferable food vouchers are nil perquisite up to ₹200 per meal, under both tax regimes.
• The old ₹50 limit was denied to new-regime employees. Rule 15(5)(a) of the Income-tax Rules, 2026 does not carry that restriction forward.
• A cash food allowance is still fully taxable.
• The ₹1,05,600 yearly figure is an illustration (2 meals, 22 days, 12 months). The limit applies per meal.
• Check your payroll settings, per-meal limits and meal records now.

What changed for food coupons in the new tax regime in FY 2026-27?

Two things changed on 1 April 2026. The tax-free limit for employer-provided meals and food vouchers rose from ₹50 to ₹200 per meal. And the earlier bar on new-regime employees using it was dropped. Under Rule 15(5)(a) of the Income-tax Rules, 2026, the benefit now works under both regimes.

The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, and the CBDT notified the new Rules on 20 March 2026. Rule 15(5)(a) replaces the old Rule 3(7)(iii). Under the old rule, a proviso denied the benefit to employees who chose the new regime. That proviso does not appear in the new rule.

How the rule compares before and after

FY 2026-27 or Tax Year 2026-27?

The new Act uses "tax year" in place of previous year and assessment year. Tax Year 2026-27 runs from 1 April 2026 to 31 March 2027, the same period most employers still call FY 2026-27. Income earned in FY 2025-26 stays under the older limit of ₹50 per meal, for old-regime employees only.

Are food coupons really tax-free under the new tax regime?

Yes, up to ₹200 per meal, when the coupon meets the conditions in Rule 15(5)(a). The rule values employer-provided food as a perquisite and sets the first ₹200 of each meal at nil. It does not limit that treatment to the old regime, so a food coupon in the new tax regime is no longer taxable up to that amount.

This is how the benefit survives in a regime that removed most exemptions. Rule 15(5)(a) is a valuation rule. It sets the taxable value of a perquisite, rather than granting a deduction or an exemption from income.

You may still see guides that say the new regime gets nothing. Some describe the old Rule 3(7)(iii), and others were written when the rules were still in draft. Read the rule text with your tax advisor, because your payroll treatment depends on it.

Which food coupons and meals qualify for the ₹200 limit?

The ₹200 limit covers employer-provided food and non-alcoholic drinks. They must be given during working hours at the office or business premises, or through paid vouchers usable only at eating joints. Vouchers must be non-transferable and cannot be exchanged for cash.

The conditions in short

• The employer provides the meal or voucher.
• It covers food and non-alcoholic beverages only.
• The meal is served during working hours at the premises, or bought with a voucher usable only at eating joints.
• The voucher is non-transferable and not encashable.
• The limit is checked per meal, not per day.

A cash food allowance is outside this list. It stays fully taxable, whatever you call it. If you run shifts, define working hours clearly in your policy. This matters most at factories and shift-based sites, where meals fall at different times.

What if a meal costs more than ₹200, or the employee pays part?

The nil value applies up to ₹200 per meal. Anything above that is a taxable perquisite, so confirm the calculation with your tax advisor.

The rule values the benefit at the employer's cost, reduced by whatever the employee pays or the employer recovers. If your payroll deducts part of a meal's cost from the employee, that recovery lowers the perquisite value.

How much can employees save, and what does it cost employers?

An employee can receive about ₹1,05,600 a year in tax-free meal value, assuming two meals a day, 22 working days a month and 12 months. At a 30% marginal rate, that saves about ₹31,680 a year before cess. If you move the same amount from a cash allowance to qualifying meals, your cost stays the same and the employee's taxable income falls.

The sum is simple: ₹200 × 2 meals × 22 days = ₹8,800 a month, and ₹8,800 × 12 = ₹1,05,600. At a 20% marginal rate, the saving is about ₹21,120.

Treat ₹1,05,600 as an illustration. The limit is set per meal, so a different number of working days or meals gives a different total. Each employee's actual saving also depends on their tax rate.

Cash allowance vs meal card vs cafeteria subsidy: which should employers use?

Use a meal card or a cafeteria subsidy, not a cash allowance, if you want employees to keep the tax saving. Cash is fully taxable. A meal card suits employees who eat out or work from several locations. A cafeteria subsidy suits sites with an on-site cafeteria, because each meal is bought during working hours at your premises.

This table is guidance for planning, not tax advice. Not every office needs a cafeteria. If you are unsure which setup suits your headcount, this guide to the pantry, office cafeteria and food court explains how to choose.

What should employers change in payroll for FY 2026-27?

Employers should check five things: how the meal benefit is delivered, whether payroll treats it as eligible in the new regime, whether limits run per meal, what records exist, and how the benefit is reported. Each check is quick, and together they decide whether employees actually receive the tax saving.

1. Replace cash food allowances. Cash gets no relief. Move the amount into qualifying coupons or cafeteria meals.
2. Check your payroll settings. If your system still treats meal coupons as old-regime only, update it. Ask your payroll vendor to confirm in writing.
3. Value each meal, not each month. A flat monthly figure can hide meals above ₹200. Set top-up rules and limits per meal.
4. Restrict spending to food. Use cards or systems that allow only food and non-alcoholic drinks, at outlets that qualify.
5. Keep an audit-ready transaction trail. A record of what was bought, when and by whom lets you answer a query quickly. This post on what a cafeteria management platform actually does explains how digital systems create it.
6. Report the benefit correctly. Make sure the perquisite value appears correctly in the tax statements you issue to employees. Confirm the form details with your CA or payroll provider.
7. Explain it to employees. Tell them what is tax-free, what the card can buy and where it works.

Subsidy checks matter too. Entitlements that nobody reconciles can drift, as the piece on the hidden costs of running office cafeterias shows.

How does an on-site cafeteria fit in?

An on-site cafeteria is one of the simpler ways to deliver the benefit, because meals are served during working hours at your premises. What matters is the record and the controls around it. HungerBox's platform supports this in three ways.

• Meal benefits by role. Facility managers can set up meal cards and free or subsidised meals through meal benefits by role in Nexus.
• Cards and payroll links. The app works with Sodexo and Zeta meal cards, and Pay Later supports payroll-deduction models. If you recover part of a meal's cost through payroll, keep the figures aligned with your tax advisor, since recoveries reduce the perquisite value.
• Order-level records. Every order is logged with counter, item, price and time.

For a closer look at how this works across sites, see corporate cafeteria management. These tools give you data and controls. The tax treatment itself stays a question for your tax advisor.

What to do next

A food coupon in the new tax regime is worth having again, but only if it is set up properly. This week, list every meal-related line in your salary structure and mark each one as cash, card or cafeteria. Send the list to your payroll vendor and tax advisor, and ask them to confirm the treatment for FY 2026-27.

If you run an on-site cafeteria and want meal benefits set by role and recorded per order, talk to the HungerBox team.

Sandipan Mitra

Co-Founder & CEO HungerBox

Sandipan Mitra is the Co-Founder & CEO of HungerBox and a pioneer in India’s FoodTech space. With extensive experience in building technology-led food businesses, he co-founded HungerBox with the vision of transforming corporate cafeterias through smarter, digital-first food experiences.