Rule 3(7)(iii) exempts prepaid meal vouchers upto Rs. 50 per meal provided to employees. But there is no clarification whether such meal vouchers need to be necessary in physical form or whether electronic form of vouchers like prepaid meal cards or digital vouchers also qualify for the same benefit. During FBT regime, there were special rules prescribed (Rule 40E) for exempting fringe benefit provided by way of electronic prepaid meal card. Hence, there is ambiguity on validity of such electronic form of vouchers in absence of similar dispensation under current rules.

Electronic forms of payments are convenient to use and have transparent audit trail. Besides, they are regulated by RBI under Payments and Settlement Systems Act, 2007 and hence there should be no concern on acceptance of such modes for tax purposes.

It was expected that under powers taken by CBDT u/s. 192 r.w. 295 to prescribe mode and manner of maintaining evidences supporting exemption for different allowances and perquisites, CBDT will permit maintaining evidences in electronic form as alternative to paper form in vogue. However, Rule 26C notified on 29 April 2016 does not specifically permit maintaining evidences in electronic form. Maintaining evidences in electronic form reduces paper work and compliance burden for both employees and employer and facilitates ‘ease of doing business’


Recognize electronic forms of meal vouchers for tax purposes Permit maintenance of evidences of exempt allowances/perquisites in electronic form.

Further, the aforesaid limit of INR 50 per meal/ tea/snack (set atleast eight years ago) is inadequate, keeping in view the increased cost of food etc, hence needs to be revised

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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June 2021