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Assessing the poverty reduction in terms of food subsidies through Public Distribution System (PDS) is an important means by which the income transfer between poor and rich expenditure classes can be analyzed. The study intends to analyze the impact of PDS on poverty on rural and urban regions. It also makes a comparative assessment between the subsidy transfers among the poor and rich expenditure classes of households. The data for this objective are adopted from 68th round of National Sample Survey Organisation (NSSO) report on PDS and other sources of household consumption (2011–2012). The impact of PDS on poverty is measured monthly per capita consumption expenditure (MPCE) decile wise by using income transfer method for major 17 states in the NSSO report. The impact of PDS on poverty is estimated through subsidy or implicit income transfer. The results of the study for all India across the rural and urban areas showed that the impact in terms of percentage increase in real MPCE is more for the poorest expenditure class in topmost MPCE deciles for all the states. [ABSTRACT FROM AUTHOR]