Meal and Fuel Card Benefits for Salaried Employees Could Mitigate Tax Burdens

Draft Income Tax Rules, 2026: Proposed Changes to Meal Vouchers and Structured Benefits

The Central Board of Direct Taxes (CBDT) has released the Draft Income Tax Rules, 2026, which proposes significant changes to the tax-free meal voucher limit for salaried employees. Currently, the exemption is available up to Rs 50 per meal, but the draft rules suggest increasing this limit to Rs 200 per meal. This change would increase the annual tax-free benefit from Rs 26,400 to Rs 1,05,600 for employees in the old tax regime.

The proposed change aims to benefit employees in the old tax regime, with potential annual savings of up to Rs 24,710 for those in the highest tax bracket. The exemption is currently only available under the old tax regime, and employees who default to the new tax regime under Section 115BAC (now moving to Section 202 of the Income Tax Act, 2025) are not eligible for the meal card exemption.

Structured Benefits: Fuel Cards and Corporate Expense Cards

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Industry experts recommend using structured benefits such as fuel cards and corporate expense cards instead of cash reimbursements. These card-based systems can improve tax efficiency for employees and reduce administrative complexity for companies. Fuel cards, in particular, can streamline fleet and travel expenditure, while corporate expense cards can help manage employee spending more efficiently.

Key Changes in the Draft Income Tax Rules, 2026

• Proposed increase in the per-meal exemption threshold for employer-provided meal vouchers from Rs 50 to Rs 200 per meal.
• Conditions for meal voucher exemption remain the same, including non-transferability and redemption only at eating joints.
• Proposed changes to the valuation of perquisites for employer-provided motor vehicles and driver expenses.
• The Draft Income Tax Rules, 2026, aims to come into force from April 1, 2026.

Benefits of Structured Benefits

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• Improved tax efficiency for employees.
• Reduced administrative complexity for companies.
• Real-time transaction data, automated reconciliation, and spending controls.
• Easier reconciliation of GST input tax credits on employee expenses.

Challenges in Implementing Structured Benefits

• Limited card acceptance in Tier 2 and Tier 3 cities and rural areas.
• Contractual and gig workers without formal banking relationships or KYC-compliant profiles present a structural challenge for card-based systems.