Sodexo Meal Card Tax Treatment & TDS Limit FY 2026-27
Are you confused about whether your Sodexo (now Pluxee) meal card is taxable? Is there really a Rs 10,000 or Rs 10,400 monthly limit? How is TDS worked out? This guide sets out the actual rule for FY 2025-26 (AY 2026-27) and the higher limit that applies from FY 2026-27.
What is a Sodexo Meal Card?
A Sodexo meal card (or similar food voucher) is a non-cash benefit provided by employers to employees to cover food and meal expenses. The employee can use the card at authorised restaurants, cafes and food outlets.
Tax classification: Meals and meal vouchers provided by the employer are perquisites. The tax-free portion comes from the perquisite valuation rules, not from a Section 10 exemption.
The Actual Rule: A Per-Meal Limit, Not a Monthly Limit
There is no Rs 10,000 or Rs 10,400 monthly exemption for meal cards in the Income Tax Act or Rules. Those figures are salary-structuring conventions, not law.
| Period | Rule | Tax-free value | Approximate monthly value (2 meals x 22 working days) |
|---|---|---|---|
| FY 2025-26 (AY 2026-27) and earlier | Rule 3(7)(iii), Income Tax Rules 1962 (paid vouchers: old regime only) | Rs 50 per meal | About Rs 2,200 |
| FY 2026-27 onwards (tax year 2026-27) | Income-tax Rules 2026 (notified 20 March 2026, effective 1 April 2026; old and new regime) | Rs 200 per meal | About Rs 8,800 |
The benefit is not taxed up to these per-meal values when the food or non-alcoholic beverages are:
- Provided by the employer during working hours, at the office or business premises, or through paid vouchers
- Through vouchers that are non-transferable and usable only at eating joints
- Not paid as a cash allowance
Anything above the per-meal value is a taxable perquisite, added to salary.
Example: Meal Card Taxability
Assume 22 working days a month and 2 meals a day (44 meals).
FY 2025-26, old regime (Rs 50 per meal)
| Component | Amount |
|---|---|
| Monthly meal card value | Rs 3,000 |
| Tax-free value (44 x Rs 50) | Rs 2,200 |
| Taxable perquisite | Rs 800 a month |
Under the new regime in FY 2025-26, the whole Rs 3,000 a month would be a taxable perquisite, because the voucher relief was not available in that regime.
FY 2026-27, either regime (Rs 200 per meal)
| Component | Amount |
|---|---|
| Monthly meal card value | Rs 10,000 |
| Tax-free value (44 x Rs 200) | Rs 8,800 |
| Taxable perquisite | Rs 1,200 a month |
Employers typically cap the card at the tax-free value for the expected number of meals so that nothing becomes taxable.
How is TDS Calculated on Meal Cards?
There is no separate 10% TDS rate for meal vouchers. The taxable excess is added to salary as a perquisite, and TDS is deducted along with the rest of the salary at the employee's average rate of tax for the year:
- FY 2025-26: under Section 192 of the Income Tax Act 1961
- FY 2026-27 onwards: under Section 392 of the Income Tax Act 2025
The perquisite is shown in the salary TDS certificate (Form 16 for FY 2025-26, Form 130 from tax year 2026-27) and in the statement of perquisites.
New Regime vs Old Regime
| Period | Old regime | New regime |
|---|---|---|
| FY 2025-26 (AY 2026-27) | Rs 50 per meal tax-free | Paid vouchers fully taxable |
| Tax year 2026-27 onwards | Rs 200 per meal tax-free | Rs 200 per meal tax-free |
FY 2025-26: a proviso to Rule 3(7)(iii), inserted by CBDT Notification 38/2020 dated 26 June 2020, says the relief for free food and non-alcoholic beverages provided through paid vouchers does not apply to an employee taxed under the new regime (Section 115BAC). So for the return you file in 2026, a meal card helps only if you chose the old regime.
Tax year 2026-27 onwards: the Income-tax Rules 2026 raise the limit to Rs 200 per meal and do not carry forward the new-regime restriction, so the relief is available whichever regime you choose. This makes meal cards one of the few salary-structuring benefits that work under the new regime.
Non-Qualifying Scenarios
- Meal allowance paid in cash with salary: fully taxable
- Prepaid cards usable for groceries, shopping or other non-food purchases: risk being treated as a cash-equivalent benefit and taxed in full
- Transferable vouchers: do not meet the condition
- Value above the per-meal limit: the excess is taxable
How to Report the Meal Card in ITR
- Check Form 16: the taxable perquisite, if any, is included in salary under Section 17(2).
- Report salary as per Form 16 in Schedule Salary of ITR-1 or ITR-2. The tax-free part is already excluded by the employer.
- Self-report any taxable excess the employer missed.
- Match TDS with Form 26AS and AIS.
Key Compliance Points for Employers
- Keep records of meal card loads and working days
- Value the perquisite at the amount above Rs 50 per meal (FY 2025-26, old-regime employees; the full value for new-regime employees) or Rs 200 per meal (FY 2026-27, both regimes)
- Include it in salary TDS at the average rate
- Report it in the quarterly salary TDS statement (Form 24Q for FY 2025-26; Form 138 from tax year 2026-27)
- Show it in Form 16 (FY 2025-26) or Form 130 (from tax year 2026-27)
Common Mistakes to Avoid
Mistake 1: Assuming a Rs 10,000 or Rs 10,400 Monthly Exemption
Fact: The law uses a per-meal limit. A card loaded with Rs 10,000 a month in FY 2025-26 would leave most of it taxable.
Mistake 2: Assuming a Flat 10% TDS
Fact: TDS on the taxable excess is at your average salary tax rate, not 10%.
Mistake 3: Using the Card for Non-Food Items
Fact: Cards that work as general prepaid instruments can be taxed in full.
Mistake 4: Applying the Rs 200 Limit to FY 2025-26
Fact: The Rs 200 per meal limit applies from 1 April 2026. For FY 2025-26 (the return you file in 2026), the limit is Rs 50 per meal.
Where Tax Garden Helps
Understanding the tax treatment of meal cards and other perquisites requires careful tracking and accurate reporting.
Tax Garden's tax experts help you:
- Check whether your meal card benefit is taxable
- Work out the correct taxable perquisite
- Report meal card benefits correctly in your ITR
- Claim refunds if excess TDS was deducted
- Respond to income tax notices on perquisite claims
Sources
Income Tax Rules 1962, Rule 3(7)(iii) (Rs 50 per meal) and CBDT Notification 38/2020 dated 26 June 2020 (new-regime proviso); Income-tax Rules 2026, notified 20 March 2026 (Rs 200 per meal from 1 April 2026, as summarised in KPMG GMS Flash Alert 2026-081 and Business Today, 4 April 2026); Income Tax Act 1961, Sections 17(2) and 192; Income Tax Act 2025, Section 392.
Disclaimer: This article is general information on meal card tax treatment. Verify current limits on incometaxindia.gov.in before acting. This is not a substitute for professional advice.
