If you are a salaried employee who has been relying on meal vouchers to trim your tax bill, here is something you need to know right away. The meal voucher exemption under the new tax regime is simply not available. Many employees switched to the new tax regime hoping to enjoy lower slab rates, only to realise later that several familiar perks had quietly disappeared. Meal vouchers, also known as food coupons or Sodexo passes, were once a reliable, easy tax-saving tool. Under the new regime, that is no longer the case.
This blog breaks down exactly what changed, why it matters for your take-home salary, and what smarter alternatives you should be looking at instead.
What Is the Meal Voucher Exemption and How Did It Work?
Under the old tax regime, employers could provide meal vouchers or food coupons to employees as a non-cash perquisite, subject to the prescribed conditions under the Income-tax Rules. The tax-free limit is up to Rs 200 per meal, where the exemption is applicable.
In practical terms, if your employer credited a meal allowance to an eligible meal card or issued meal vouchers in accordance with the prescribed rules, the eligible amount would not form part of your taxable salary under the old tax regime. Over a year, this could result in meaningful tax savings depending on your income tax slab and the number of eligible meals provided.
Why Salaried Employees Valued Meal Vouchers
- The benefit was available through employer-issued meal cards or food vouchers used for eligible food and non-alcoholic beverages.
- It worked alongside other eligible exemptions and deductions available under the old tax regime, such as Leave Travel Allowance (LTA) and House Rent Allowance (HRA), subject to the prescribed conditions.
- It helped optimise the salary structure for both employers and employees.
- The tax benefit increased with higher tax slabs, making it an attractive salary component.
In other words, it was a simple way to reduce taxable income under the old tax regime. However, employees opting for the new tax regime cannot claim the meal voucher exemption, so the tax advantage is no longer available to them.
The New Tax Regime: What Changed for Meal Vouchers
The new tax regime, introduced in Budget 2020 and made the default tax regime from FY 2023-24, offers lower tax rates in exchange for giving up most exemptions and deductions. The meal voucher exemption is generally not available under the new tax regime, making the value of meal vouchers taxable if they are provided as part of your salary package.
Under the Income-tax Act and the prescribed perquisite valuation rules, employer-provided meal vouchers or food coupons could qualify for tax exemption under the old tax regime, subject to the prescribed conditions. However, if you opt for the new tax regime under Section 115BAC, this exemption is not available. As a result, the value of the meal voucher or food coupon is generally included in your taxable salary.
What the Slab Rates Look Like Under the New Regime (FY 2025-26)
| Annual Income | New Tax Regime Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% |
| Rs 8,00,001 to Rs 12,00,000 | 10% |
| Rs 12,00,001 to Rs 16,00,000 | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
The new regime’s lower tax rates can be attractive, particularly for taxpayers with limited deductions and exemptions. However, in return, you forgo most tax exemptions and deductions available under the old tax regime, including the tax benefit on eligible meal vouchers.
5 Key Facts About Meal Voucher Exemption Under the New Tax Regime
Fact 1: The Exemption Is Generally Not Available
If you have opted for the new tax regime, the tax exemption available for eligible meal vouchers under the old regime is generally not available. Your employer may still provide meal vouchers or load money onto a meal card as part of your salary package, but the tax benefit available under the old regime cannot be claimed.
Fact 2: The Standard Deduction Is the Main Salary-Level Relief
Under the new tax regime, salaried individuals can claim a standard deduction of Rs 75,000 for FY 2025-26 (AY 2026-27). Most common salary exemptions, such as HRA and LTA, are not available under the new regime.
Fact 3: Salaried Employees Can Choose Their Tax Regime Every Year
If you are a salaried employee without business or professional income, you can choose between the old and new tax regimes each financial year while filing your income tax return (subject to the applicable provisions). If the tax benefits available under the old regime—including HRA, LTA, Section 80C deductions, and the meal voucher exemption where applicable—result in lower overall tax, you may opt for the old regime for that year.
Fact 4: The Right Tax Regime Depends on Your Overall Tax Position
Meal vouchers alone should not determine your choice of tax regime. The correct comparison is between your total eligible deductions and exemptions under the old regime and the lower tax rates plus the Rs 75,000 standard deduction available under the new regime. The more deductions and exemptions you can legitimately claim under the old regime, the more likely it is to be beneficial.
Fact 5: Salary Structures May Be Changing
Since the new tax regime is the default tax regime, some employers have reviewed and revised their salary structures. Depending on company policy, the meal voucher component may be reduced, removed, or replaced with other salary components. However, salary structuring varies from one employer to another, so employees should check with their HR or payroll team before making assumptions.
A Practical Example: How Much Do You Actually Lose?
Let us take the case of Karan, a software professional in Pune earning Rs 10 lakh per annum. His employer provides eligible meal vouchers valued at Rs 26,400 per year.
Under the old tax regime, if the meal vouchers qualify for tax exemption under the prescribed conditions, and Karan falls in the 20% tax slab, the exemption can result in a tax saving of approximately Rs 5,280 (excluding health and education cess).
Under the new tax regime, the tax exemption for meal vouchers is generally not available. Consequently, the value of the meal vouchers becomes taxable as part of his salary. Assuming Karan falls in the 10% tax slab under the new regime for FY 2025-26 (AY 2026-27), the additional tax attributable to the Rs 26,400 meal voucher component would be approximately Rs 2,640 (excluding health and education cess).
The exact tax impact depends on the tax regime chosen, your applicable tax slab, and your overall salary structure. Meal vouchers alone should not determine your choice of tax regime. When considered together with other deductions and exemptions such as HRA, LTA, Section 80C deductions, and eligible home loan benefits under the old tax regime, the overall tax difference between the two regimes can be substantial. Therefore, it is always advisable to compare your total tax liability under both regimes before making a decision.
What You Should Do Instead: Smarter Tax Planning Under the New Regime
Losing the meal voucher exemption does not mean you are left with no options. The new tax regime may withdraw certain tax benefits, but it also offers lower tax rates and a simpler tax structure for many taxpayers. Here are some practical steps you can take.
Step 1: Run a Full Regime Comparison Before Each Financial Year
Do not assume the new regime is always better or always worse. Compare your tax liability under both regimes using your actual salary structure, HRA exemption, eligible home loan benefits, Section 80C investments, employer NPS contribution, and other applicable deductions and exemptions. Most employers ask employees to declare their preferred tax regime at the beginning of the financial year for TDS purposes.
Step 2: Maximise the Standard Deduction
The Rs 75,000 standard deduction is the primary salary-level deduction available under the new tax regime for FY 2025-26 (AY 2026-27). Ensure your employer considers it correctly while calculating your TDS. It is generally allowed automatically, but you should still verify it in your Form 16.
Step 3: Focus on Employer-Side Benefits That Still Apply
Even under the new tax regime, certain employer contributions and retirement benefits continue to receive favourable tax treatment.
- Employer’s contribution to NPS: Deduction under Section 80CCD(2) continues to be available. The deduction is available up to 10% of Basic Salary + Dearness Allowance under the old tax regime and up to 14% under the new tax regime for private sector employees. For Central and State Government employees, the limit is 14% under both regimes.
- Gratuity received on retirement: Exempt up to the applicable statutory limit, subject to the prescribed conditions.
- Leave encashment on retirement: Exempt up to the applicable statutory limit for eligible non-government employees, subject to the prescribed conditions.
- Retrenchment compensation: Eligible for exemption subject to the provisions of the Income-tax Act.
Step 4: Think Beyond Tax Saving and Start Building Wealth
Tax saving is important, but it should not be the only factor driving your financial decisions. While meal vouchers may have offered a tax benefit under the old tax regime, building long-term wealth through disciplined investing is generally far more impactful than relying on salary allowances alone.
For example, investing regularly through a Systematic Investment Plan (SIP) in mutual funds, based on your financial goals, investment horizon, and risk appetite, can help you build long-term wealth. Remember that mutual fund investments are subject to market risks, and returns are not guaranteed.
Old Regime vs New Regime: Quick Comparison for Salaried Employees
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| Meal Voucher Exemption | Available (subject to the prescribed conditions and limits) | Not available |
| HRA Exemption | Available | Not available |
| Section 80C Deduction | Up to Rs 1.5 lakh | Not available |
| Standard Deduction | Rs 50,000 | Rs 75,000 |
| Employer NPS [Section 80CCD(2)] | Available (up to 10% of Basic Salary + DA for private sector employees and 14% for Central and State Government employees) | Available (up to 14% of Basic Salary + DA for both private sector and Central and State Government employees) |
| LTA Exemption | Available | Not available |
| Home Loan Interest [Section 24(b)] | Available for eligible self-occupied house property, up to Rs 2 lakh, subject to conditions | Not available for self-occupied house property |
| Tax Slab Rates | Higher slab rates | Lower slab rates |
As the table shows, the new tax regime is a trade-off, not an automatic upgrade. Whether it is beneficial depends on the overall value of the deductions and exemptions you are eligible to claim under the old tax regime compared with the lower tax rates and higher standard deduction available under the new tax regime.
Final Words: Rethink Your Tax Strategy, Then Invest What You Save
The removal of the meal voucher exemption under the new tax regime is a reminder that tax rules change, and your financial strategy should evolve accordingly. Relying on a single exemption, such as meal vouchers, was never a complete tax planning strategy. It was only one part of your overall financial plan.
The smarter approach is to compare your tax liability under both tax regimes each financial year, claim every deduction and exemption available under your chosen regime, and invest the resulting savings in a disciplined manner to build long-term wealth.
Most importantly, avoid making financial decisions in isolation. Tax planning, salary structuring, insurance, retirement planning, and investing should work together. A well-planned investment strategy, aligned with your financial goals, investment horizon, and risk appetite, is likely to have a much greater impact on your long-term financial well-being than the tax benefit from any single salary component.
Frequently Asked Questions
1. Is the meal voucher exemption completely removed under the new tax regime?
Yes. If you opt for the new tax regime, the tax exemption available for eligible meal vouchers under the old regime is generally not available. As a result, the value of employer-provided meal vouchers or food coupons is generally taxable as part of your salary.
2. Can I still get meal vouchers from my employer under the new regime?
Yes. Your employer may continue to provide meal vouchers or food coupons as part of your salary structure. However, if you have opted for the new tax regime, the tax exemption is generally not available, and the value is treated as taxable salary.
3. Should I switch back to the old tax regime just to claim the meal voucher exemption?
Not necessarily. The meal voucher exemption alone should not determine your choice of tax regime. Compare your total tax liability under both regimes after considering all eligible deductions and exemptions, such as HRA, Section 80C, eligible home loan benefits, LTA, and employer NPS contribution, before making a decision.
4. Which deductions are still available under the new tax regime?
For FY 2025-26 (AY 2026-27), the new tax regime continues to allow the standard deduction of Rs 75,000 for salaried individuals and the deduction for the employer’s contribution to NPS under Section 80CCD(2). Certain retirement-related exemptions, such as eligible gratuity and leave encashment benefits, also continue to be available subject to the provisions of the Income-tax Act.
5. How can I make the most of my salary if meal vouchers no longer provide a tax benefit?
Focus on optimising the deductions and benefits that remain available under your chosen tax regime, particularly the employer’s contribution to NPS under Section 80CCD(2) where applicable. In addition, build long-term wealth through disciplined, goal-based investing. Any investment decision should be based on your financial goals, investment horizon, and risk appetite rather than tax savings alone.
Disclaimer
The information provided in this blog is for educational and informational purposes only and should not be construed as investment advice. Please consult a qualified financial advisor before making any investment decisions. Shashikant Chanderkumar Mudaliar (ARN: 319377), operating under the brand name VSJ FinMart, is an AMFI-registered Mutual Fund Distributor (MFD) and does not provide investment advisory services. Mutual fund investments are subject to market risks. Past performance is not indicative of future results. Please read all scheme-related documents carefully before investing. Registration details can be verified at www.amfiindia.com/locate-distributor.