Classification of Food Coupons 

Under the Code on Wages, 2019, which became effective on 21 November 2025, the definition of "wages" has been refined to include not only cash payments but also certain non-cash benefits provided to employees such as food coupons and meal vouchers. These non-cash benefits are legally referred to as "remuneration in kind."


Defining Remuneration in Kind

As per Section 2(y) of the Code on Wages, 2019, Remuneration in kind occurs when an employer provides specific benefits or facilities to an employee in lieu of a portion of their cash wages. 


Typical examples of such benefits include:

  • Food coupons (such as meal vouchers, SODEXO passes, Meal cards etc).
  • Ration items (essential commodities provided at a discount or for free).
  • Mobile recharges or similar communication allowances.

These items are considered part of the "wages" only if they are provided as per the terms of employment.


The 15% Rule

The Code on Wages introduces a specific ceiling on how much of these "in-kind" benefits can be legally classified as wages. The "15% Rule" stipulates that the value of remuneration in kind is deemed to form part of an employee's wages only to the extent that it does not exceed 15% of the total wages payable to them.


If the value of these perks exceeds this 15% threshold, only the amount up to that limit is added to the statutory "wage" figure used for calculating benefits like provident fund (PF) and gratuity. This rule ensures that a significant majority of an employee's statutory wage base remains in liquid cash.


This is known as the 15% rule (Not to be confused with the 50% rule). 

Working Example: Calculating the 15% Cap


To understand how this applies in a real-world payroll scenario, consider an employee with the following monthly compensation structure (note: these figures are illustrative and not drawn from the source documents):

  • Cash Wage Components (Basic + DA): ₹40,000
  • Remuneration in Kind (Food Coupons): ₹10,000
  • Total Wages Payable: ₹50,000



Step 1: Determine the 15% Limit The law allows up to 15% of the total wages to be attributed to the "in-kind" portion.

  • 15% of ₹50,000 = ₹7,500


Step 2: Compare the Actual Value to the Limit The employee is receiving ₹10,000 in coupons, but the statutory cap for "wages" is only ₹7,500.


Step 3: Determine the Final "Statutory Wage" According to the Code's explanation, only the value not exceeding 15% is deemed as wages.

  • Core Cash Wages: ₹40,000
  • Deemed Wage from Kind (capped at 15%): ₹7,500
  • Total Statutory Wages for Benefits: ₹47,500


In this instance, while the employee's total package was ₹50,000, only ₹47,500 would be used as the base for statutory contributions. The remaining ₹2,500 of the coupon value is excluded from the legal definition of "wages."