Notification No. 1

Income-tax (First Amendment) Rules, 2009 - Insertion of rule 40E

What this is

Notification No. 1 was published on 5 January 2009. Its subject is Income-tax (First Amendment) Rules, 2009 - Insertion of rule 40E.

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

The Income-tax (First Amendment) Rules, 2009 insert a new rule 40E in Part VIIC of the Income-tax Rules, 1962, after rule 40D, prescribing the conditions for the purposes of sub-clause (iii) of clause (B) of sub-section (2) of section 115WB. A non-transferable pre-paid electronic meal card must satisfy all of the following: it must be granted by the employer to its employees under a scheme framed by the employer specifying the circumstances in which it may be used; it must be issued by the issuing bank; no employee may be issued more than one card; the card must bear the name of the employer along with the name, photograph and signature of the employee; it must be used only by the employee to whom it is issued; it must be used only to purchase ready to eat food or non-alcoholic beverage from a member establishment; the aggregate amount so purchased during a day by an employee must not exceed one hundred rupees; and the details of each transaction must be maintained by both the employer and the member establishment in the manner and for the period required under the Act for any other similar transaction. The Explanation defines 'banking company' by reference to clause (viii) of sub-section (1) of section 36, defines 'issuing bank' as a banking company which issues the card under an agreement with the employer and has contracted with the member establishment, and defines 'member establishment' as a restaurant, hotel, canteen or outlet selling ready to eat food or non-alcoholic beverage, excluding one selling alcoholic beverage.

Who it reaches

employers issuing pre-paid electronic meal cards
employees holding such cards
issuing banks and member establishments
assessing officers computing fringe benefits under section 115WB

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.36	s.2, s.29, s.30, s.31, s.32, s.66
s.115WB	no counterpart recorded
s.295	s.533

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

INCOME-TAX (FIRST AMENDMENT) RULES, 2009 - INSERTION OF RULE 40E

NOTIFICATION NO. 1/2009, DATED 5-1-2009

In exercise of the powers conferred by section 295 read with sub-clause (iii) of clause ( B) of sub-section (2) of section 115WB of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :—

1. (i) These rules may be called the Income-tax (First Amendment) Rules, 2009.
(ii) They shall come into force with effect from the 1st day of April, 2009.
2. In the Income-tax Rules, 1962, in Part VIIC, after rule 40D, the following rule shall be inserted, namely:—
"Prescribed conditions for the purposes of sub-clause ( iii) of clause (B ) of sub-section (2) of section 115WB.
40E. For the purposes of sub-clause (iii) of clause ( B) of sub-section (2) of section 115WB, the non-transferable pre-paid electronic meal card (hereinafter called the "card") shall fulfil the following conditions, namely:—
(i) The card shall be granted by the employer to its employees under a scheme framed by the employer specifying therein the circumstances under which the meal card can be used by the employee.
(ii) The card under clause (i) shall be issued by the issuing bank.
(iii) An employee shall not be issued more than one card.
(iv) The card shall bear the name of the employer along with the name, photograph and signature of the employee to whom the card is issued.
(v) The card shall be used only by the employee to whom the card is issued.
(vi) The card shall be used by the employee only for the purpose of purchasing ready to eat food or non-alcoholic beverage from a member establishment.
(vii) The aggregate amount of ready to eat food or non-alcoholic beverage purchased during a day by an employee shall not exceed one hundred rupees.
(viii) The details of each transaction of purchases made by the employee against the card shall be maintained by the employer and the member establishment in such manner and for such period as is required under the Act for any other similar transaction.
Explanation.- For the purposes of this rule, —
(i) "banking company" shall have the same meaning as assigned to in clause (viii) of sub-section (1) of section 36 of the Act;
(ii) "issuing bank" means a banking company -
(a) which issues the card to the employees of an employer in pursuance to an agreement entered into with the employer; and
(b) which has entered into a contract with the member establishment authorizing him to allow purchases against the card, issued by it in accordance with the conditions stipulated in sub-clause (iii) of clause (B) of sub-section (2) of section 115WB and this rule; and
(iii) "member establishment" shall mean a restaurant, hotel, canteen or an outlet which sells ready to eat food or non-alcoholic beverage, but shall not include a restaurant, hotel, canteen or an outlet selling alcoholic beverage."

[F. No. 133/70/2008-TPL]

What it changes

The rule numbers are the 1962 Rules’ own, as the notification names them. The right-hand column is the department’s own mapping into the Income-tax Rules, 2026, which renumbered nearly everything.

Rule of the 1962 Rules	Now, in the 2026 Rules
Rule 40E	no counterpart recorded

From when

1 April 2009.

What to watch

The rules come into force with effect from 1 April 2009.
The daily cap of one hundred rupees is on the aggregate purchases of the day, not on a single transaction.
The card must carry the employee's photograph and signature and may be used only by him; a second card to the same employee is outside the rule.
A member establishment selling alcoholic beverage is excluded, and the purchase must be of ready to eat food or non-alcoholic beverage.
The record-keeping obligation falls on the employer and the member establishment alike.

Where you meet it

A reader meets this in the fringe benefit tax return of an employer operating a meal card scheme, and where the value of such benefits is examined in assessment.

What it names

Rules it names. Rule 40D, 40E of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 14/2023 — Standard operating procedure SOP for making application for recomputation of total income of a co operative society enga 27 July 2023
Circular No. 18/2021 — Clarification regarding section 36 1 xvii of the income tax act 1961 inserted vide finance act 2015 25 October 2021
Notification No. 56 — For the purposes of the said clause notified under section 4 11 April 2008
Circular No. 3/2008 — Explanatory Notes to the Provisions of the Finance Act, 2007 12 March 2008
Notification No. 21 — For the purposes of the said clause notified under section 3 5 February 2008
Notification No. 208 — Amendment of the Income-tax Rules under section 14A of the Income-tax Act, 1961 10 August 2006

← Notification No. 2 · Notification No. 111 →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.