The provision of free meals varies widely from uniform canteen food, coupons, etc., to lavish hotel meals. The scheme of free meals as a staff welfare measure had been recognized and was admissible upto Rs. 35 for each meal. The new rule does not treat as perquisite free food and non-alcoholic beverages to the extent the value thereof does not exceed Rs. 50.

Where any amount is recovered from the employee, such amount shall be reduced from the value of perquisite. Such free or subsidized food or non-alcoholic beverages should however be provided at office premises or through non-transferable vouchers meant only for meals during working hours. These vouchers provided by employers should be usable only at an eatery, a restaurant or a cafe. Tea or similar non-alcoholic beverages and snacks – in the form of light refreshments during working hours are not charged as perquisite.

Furthermore, arrangements for free meals in ‘remote areas’ and similar off-shore sites as specified, shall be exempt. However, expenditure on provision of free meals by the employer in excess of Rs. 50 should be treated as perquisite, as reduced by recoveries made from the employee.