Meal Cards, Gifts and Education Allowance: The Salary Limits That Rose in 2026
From 1 April 2026, tax-free meal vouchers rose to ₹200 a meal, employer gifts to ₹15,000 a year, interest-free loans without perquisite to ₹2 lakh, children education allowance to ₹3,000 a month per child and hostel allowance to ₹9,000. Meal cards and gifts help in both regimes; the allowances only in the old regime.
Some salary limits had not moved in decades. A ₹100 a month education allowance or a ₹50 meal was meaningless in today's prices. The Income-tax Rules, 2026, in force from 1 April 2026, raised several of them, and most companies have not yet updated their salary structures.
The new limits
| Benefit | Old limit | From 1 April 2026 |
|---|---|---|
| Meal vouchers or meal cards during working hours | ₹50 a meal | ₹200 a meal |
| Gifts, vouchers or tokens from the employer | ₹5,000 a year | ₹15,000 a year |
| Children education allowance | ₹100 a month per child (two children) | ₹3,000 a month per child |
| Hostel allowance for children | ₹300 a month per child | ₹9,000 a month per child |
| Interest-free or low-interest loans | No perquisite up to ₹20,000 | No perquisite up to ₹2 lakh |
Which regime they apply in
- ✓Perquisite rules decide how a benefit is valued, and generally apply in both regimes. Tax-free meal vouchers, the gift limit and the loan limit fall in this group.
- ✓Allowance exemptions, such as children education and hostel allowance, are available only under the old regime, like HRA.
So meal cards and gifts help every employee. Education and hostel allowances help only those in the old regime.
What it is worth
An employee on 22 working days a month, receiving a ₹200 meal card each day:
- ✓₹4,400 a month, about ₹52,800 a year, can be tax-free;
- ✓at a 20% tax rate plus cess, that saves about ₹11,000 a year, in either regime.
An old-regime parent of two children, with both allowances at the maximum:
- ✓education allowance: ₹3,000 × 2 × 12 = ₹72,000 tax-free;
- ✓hostel allowance, if the children board: ₹9,000 × 2 × 12 = ₹2,16,000 tax-free.
How to restructure CTC
- Add a meal card option through a prepaid card provider, with a daily cap of ₹200 per working day.
- Move festive gifts into the ₹15,000 limit, and track the year's total per employee.
- Offer education and hostel allowances to old-regime employees with school-going children, against proof.
- Keep CTC unchanged: these are reallocations of existing pay, not increases.
- Explain it in one page. Employees take up benefits they understand.
Points to watch
- ✓Meal vouchers must be used for food and given for working days. Cash meal allowances are fully taxable.
- ✓Gifts above ₹15,000 in a year become taxable on the full value, not just the excess, so stop at the limit.
- ✓Under labour codes, allowances above 50% of total pay are added back to wages for PF and gratuity. Check the effect before shifting large amounts out of basic pay.
Frequently asked questions
Can we pay the meal amount in cash?
No. The exemption is for vouchers, cards or meals provided, not cash.
Is a Diwali gift card part of the ₹15,000?
Yes. Any gift, voucher or token from the employer counts towards the yearly total.
Do these limits apply to FY 2025-26?
No. They apply from 1 April 2026, for Tax Year 2026-27 onward.
Sources
- ✓Income Tax Rules 2026: key changes and exemption limits, ClearTax
- ✓India flash alert on Income-tax Rules 2026, KPMG
- ✓Meal voucher exemption under the new rules, EbizFiling
This is a summary, not tax advice. Confirm with your chartered accountant before you rely on it.
Written by
HR Manager, Airwix Technologies (Sleet)
Nihit Dobariya is the HR Manager at Airwix Technologies in Ahmedabad, where he runs HR and payroll for the team behind Sleet. He writes about payroll, PF and ESIC, professional tax, the labour codes and everyday HR practice for Indian employers, and checks each rule against the official notification before it is published.
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