## Free Food & Beverages Provided by Employer

Facility	Treatment
Tea / Coffee / Snacks / Breakfast provided in office during working hours	Fully Exempt
Free meals provided in office located in a remote area	Fully Exempt
Free / subsidised meals in office located in a normal area	Exempt upto ₹50 per meal; excess is taxable.
Meal coupons / vouchers (e.g., Sodexo) – non-transferable and usable only at eating joints	Exempt upto ₹50 per meal
Lunch / refreshment provided on non-working days or outings	Fully Taxable

### Notes

'Remote area' generally means an area located at least 40 km away from a town of population ≤ 20,000 (or beyond municipal limits, as specified).
The ₹50 per meal limit applies per meal, not per day; for two meals (lunch + dinner) it can extend to ₹100 per day, subject to working hours.
Coupons must be non-transferable to qualify for the exemption.

Worked example

### Example 1

Example 1: Employer provides lunch worth ₹80 per meal for 250 working days in a normal location. → Taxable per meal = ₹80 − ₹50 = ₹30. Annual taxable perquisite = 30 × 250 = ₹7,500.

### Example 2

Example 2: Free tea/snacks during office hours costing employer ₹10,000 p.a. → Fully Exempt.

### Example 3

Example 3: Meal coupons (non-transferable) of ₹100 per working day; meal cost capped at ₹50. → Exempt up to ₹50 per meal; balance ₹50 per coupon taxable.

⚠️ Common exam mistakes

Treating the ₹50 limit as 'per day' instead of 'per meal'.
Allowing exemption on transferable meal coupons or gift cards – disallowed.
Treating refreshments on outings/parties as exempt – the exemption is only for in-office, during-working-hours meals.

Bare-Act text Rule 3(7)(iii) · Income-tax Rules, 1962 · click to expand

Rule 3(7)(iii) – The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by — (i) the amount, if any, paid or recovered from the employee for such benefit or amenity; (ii) provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

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Perquisite – Food / Lunch / Refreshments

Worked example

⚠️ Common exam mistakes