Food card reporting in ITR: What salaried employees need to know for FY27

The Income-Tax Rules, 2026 have significantly enhanced the tax treatment of employer-provided meal benefits. Effective April 1, 2026, the tax-exempt limit on meal vouchers and prepaid cards — such as Sodexo (Pluxee), Zaggle, and Zeta — has been increased from ₹50 to ₹200 per meal. This marks a substantial jump in the tax-free component available to salaried employees.

For those receiving two meals per working day across 22 working days a month, the annual tax-exempt benefit can now go up to ₹1,05,600, compared to ₹26,400 earlier. For individuals in the 30% tax bracket, this translates into potential tax savings of approximately ₹24,000–₹25,000 annually, depending on salary structuring.

Old vs New Tax Regime

For Assessment Year (AY) 2026–27 (FY 2025–26), the exemption remains capped at ₹50 per meal and is available only under the old tax regime due to restrictions in the Income Tax Act, 1961. However, from Tax Year 2026–27 onwards, the revised Income Tax Act, 2025 removes this limitation.
This means that the ₹200 per meal exemption will be available under both the old and new tax regimes, significantly improving the attractiveness of meal cards as a tax-saving instrument.

Food card benefits

Despite being tax-exempt up to prescribed limits, meal card benefits must still be reported in income tax returns. These benefits are treated as perquisites under salary income.

Employees should note that meal card benefits are not shown as a separate line item in Form 16. Instead, they are included in the total value of perquisites under Section 17(2). 

Therefore, it is critical to:

Review Form 16 (Part B) carefully
Cross-check with Form 12BA, where detailed perquisite break-up is often provided
Verify salary slips and employer-provided compensation structure
Accurate reconciliation ensures that exempt and taxable portions are correctly captured.

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Taxability of excess amount

If the value of meal benefits exceeds the prescribed threshold—₹50 per meal (AY 2026–27) or ₹200 per meal (Tax Year 2026–27)—the excess amount becomes taxable.

This excess must be reported under:
Income from Salary → Perquisites (Section 17(2)) → Schedule S in ITR
Failure to disclose excess amounts can lead to underreporting of income and potential tax notices.

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What if employer has not accounted for it?

In cases where the employer has not included the taxable portion of meal benefits in Form 16, the responsibility shifts to the employee. The excess amount must be manually computed and added while filing the return. This step is particularly important for employees with flexible compensation structures or higher meal allowances.

Documentation and compliance requirements

To claim the exemption, maintaining proper documentation is essential. Employees should retain:

> Food card transaction statements

> Salary slips and compensation break-ups

> Employer policy documents

These records help establish compliance with prescribed rules and validate eligibility during scrutiny.

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Conditions for tax exemption

Meal card benefits qualify for tax exemption only when they are structured correctly within the salary framework. They must be provided as a separate component of compensation, issued through non-transferable prepaid cards or vouchers, and used strictly for food and grocery purchases.

If these conditions are not met, particularly if the benefit is merged into the regular salary, it loses its tax-exempt status and becomes fully taxable.

Tax-saving tool

With rising living costs and evolving tax rules, meal cards are emerging as an efficient tax optimisation tool. The higher exemption limit and inclusion under both tax regimes from FY27 enhance their appeal.

However, the actual benefit depends on usage patterns. Employees who regularly use meal cards for eligible expenses stand to gain the most, while others may see limited tax advantage.