Meal Allowance taxable under New Tax Regime
– SGC Services Payroll Updates
💡 Did You Know? Meal Allowance/Voucher is Taxable in the New Tax Regime 🍽️💼
With the introduction of the New Tax Regime in India, a lot has changed for salaried employees when it comes to tax savings and exemptions. One of the most crucial changes that many might not be aware of is the taxability of meal allowance/vouchers.
👉 What’s the Scenario? Under the Old Tax Regime, employees could enjoy meal allowances or meal vouchers as a part of their salary package, and a certain amount of it was exempt from tax. This provided a significant relief and was considered a smart way to structure salary.
However, in the New Tax Regime (Section 115BAC), the situation has changed. Meal allowances or vouchers are now fully taxable!
🔍 Section Reference: The new tax regime introduced under Section 115BAC of the Income Tax Act, 1961, simplifies the tax structure by offering lower tax rates but at the cost of foregoing various exemptions and deductions, including meal vouchers/allowances.
Under this regime, most of the exemptions available under Chapter VI-A and allowances such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and yes, even the beloved meal allowance/voucher are no longer exempt and become part of the taxable income.
⚠️ What Does This Mean for Employees? This means if you opt for the new tax regime:
- The amount you receive as a meal allowance or in the form of meal vouchers will be added to your taxable salary.
- There is no exemption available on these benefits, which were earlier partially or fully tax-free under the old regime.
💡 Why Is This Important? Meal allowances were often structured in a way to optimize tax savings. Now, under the new regime, employers and employees must rethink their salary structure as these benefits become taxable income, potentially increasing the overall tax liability.
If you’re still following the Old Tax Regime, you’re likely still eligible for these exemptions, but make sure to do a thorough comparison to understand which regime suits your financial situation the best!
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