Meal perquisite ₹200 per meal: what the 2026 tax rules mean for canteens and meal cards

For years, the meal limit in the tax rules was ₹50 a meal, a number set long before anyone in India could buy a decent lunch for it. The Income-tax Rules, 2026 raised it. The meal perquisite limit of ₹200 per meal applies from tax year 2026-27, and it changes the arithmetic for factory canteens, office cafeterias and meal cards alike.

What the rule says

Rule 15(5)(a) of the Income-tax Rules, 2026, which replaced the old rule 3(7)(iii), leaves three things out of the employee's taxable perquisites:

1. Free food and non-alcoholic drinks provided by the employer during working hours, at the office or business premises, or through non-transferable paid vouchers usable only at eating places, up to ₹200 a meal.
2. Tea or snacks provided during working hours, in full.
3. Free food in remote areas or offshore installations.

The ₹200 figure applies from 1 April 2026. For 2025-26 and earlier, ₹50 still applies.

Meal perquisite ₹200 per meal: three worked examples

A factory canteen. A Pune plant serves lunch in its canteen. The meal costs ₹90; the company pays ₹70 and the worker pays ₹20. The value provided by the employer is ₹70, comfortably under ₹200. No perquisite, nothing in TDS.

A meal card in an office. A Gurugram company loads ₹150 a working day on a non-transferable meal card for lunch. That is one meal a day, under ₹200. No perquisite.

A generous meal card. Another company loads ₹250 a day for one meal. The first ₹200 is exempt; ₹50 a day is a perquisite. Over 22 working days that is ₹1,100 a month, ₹13,200 a year, added to salary for TDS.

The limit is per meal, not per day. A night-shift worker who gets dinner and an early breakfast in the canteen has two meals, each with its own ₹200.

Tea and snacks perquisite: fully excluded

Tea, coffee and snacks during working hours are left out entirely. There is no rupee limit to track. In canteen systems, set tea and snack items as "not a perquisite" so they never enter the calculation.

Canteen subsidy tax: how to value it

Three practical points:

• Value what the employer provides. If the employee pays part of the cost, that part is not a perquisite.
• The perquisite is annual. The monthly figure only decides how TDS is spread. Use the same pay cycle as salary, so a canteen month that runs 26th to 25th matches the payroll month.
• Report it. Meals have their own row in Form 123, the statement of perquisites that replaced Form 12BA. Any taxable value also flows into the year's TDS and, in Q4, into the salary details of the Form 138 return.

Meal card in the new tax regime

This is the one open question. Most commentators read the 2026 rule as available under both regimes, because the rule itself does not bar the new regime. At least one published summary said it applies only in the old regime. Until there is clarity from CBDT, treat the exemption as likely available in both, and ask your CA before you redesign CTC around meal cards.

Why the canteen perk matters

For a factory, a subsidised canteen is often not optional. Labour law has long required larger factories to run one, and state rules usually require a canteen managing committee with worker representatives and approval of prices. With the ₹200 limit, a typical subsidised lunch is now comfortably outside tax.

For an office, a meal card of up to ₹200 a meal is one of the few benefits that costs the company a rupee and gives the employee very close to a rupee of value. On a ₹150 daily card, that is ₹3,300 a month of spending that does not attract income tax.

One caution on the company's side: GST input tax credit on food and beverages for employees is generally blocked, except where the company provides them because a law requires it, as with a statutory canteen. Your accountant should treat canteen vendor bills accordingly.

Three mistakes we see often

• Applying the limit per day instead of per meal. A night-shift worker who gets two canteen meals has two ₹200 limits, not one.
• Taxing the full meal cost. Only the employer's share counts. If the worker pays ₹20 for a ₹90 lunch, the value to consider is ₹70.
• Forgetting the date. The ₹200 limit starts on 1 April 2026. If you revise an older year, for example while correcting a Form 16 for 2025-26, the old ₹50 limit still applies there.

A setup checklist

1. List every meal benefit: canteen, cafeteria, meal cards, night-shift food, guest meals.
2. Mark tea and snacks as outside the perquisite.
3. Set ₹200 a meal from 1 April 2026, with ₹50 for earlier periods if you are revising old years.
4. Value only the employer's share of each meal.
5. Group by pay cycle, so the perquisite lands in the right month's TDS.
6. Check the new-regime position with your CA for meal cards.
7. Keep canteen committee approvals for prices, if your site has a statutory canteen.

If the company also pays tax on behalf of employees in some cases, such as ESOPs, that has its own rules; see tax paid by the employer on behalf of the employee. For plants choosing software, canteen and payroll working together is one of the questions in our HRMS for manufacturing checklist.

Vatsin Canteen records each meal with the rate rule behind it, leaves tea and snacks out of the perquisite, and sends the employer's cost above ₹200 a meal to payroll for TDS, grouped by the pay cycle.