Tds on hotel bill
This query is : Resolved
30 March 2016
Sir,
Mr.A is a director of ABC Ltd.He went to XYZ Hotel with some business guest and had dinner.Hotel has tie up with company so bill is sent after 2-3 days for payment.Now the question is :
1) Should we deduct TDS on these payments?
2) Is it make difference if payment is made on the spot?
3) And is there any TDS on takeaways if we buy it frequently from the same hotel??
Please answer ASAP.Thanks in advance.
Mr.A is a director of ABC Ltd.He went to XYZ Hotel with some business guest and had dinner.Hotel has tie up with company so bill is sent after 2-3 days for payment.Now the question is :
1) Should we deduct TDS on these payments?
2) Is it make difference if payment is made on the spot?
3) And is there any TDS on takeaways if we buy it frequently from the same hotel??
Please answer ASAP.Thanks in advance.
30 March 2016
Yes , TDS Need to be deducted @ 2% (Contractual Nature work)
Message likes :
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30 March 2016
But as per my understanding no need to deduct tds if food is served in normal course of business.Can u quote some case law or circular / notification?
27 July 2025
Good set of questions! Here’s a detailed take on TDS on hotel bills related to meals and other services:
---
### 1) **Should TDS be deducted on payments to the hotel for business dinner?**
* **TDS under Section 194C (Contractual payments)** at 2% is generally applicable on payments for **services like catering, food, etc.,** if these are treated as a contract for providing services.
* However, **food and beverage services provided by a hotel or restaurant in normal course of business** (like a dinner or takeaway) are typically considered **sale of goods or service and not a contract for work.**
* **CBDT Circular No. 715 dated 14/04/1994** clarified that TDS under Section 194C is **not applicable on catering bills** when these are considered as supply of goods and services by the hotel/restaurant.
**So, for business dinners at a hotel:**
* Usually **no TDS deduction is required on food and beverage bills** paid to hotels/restaurants, even if it’s for a business guest.
* If the hotel bills separately for accommodation (rent), then TDS under **Section 194I** applies on accommodation charges **if conditions for rent TDS are met**.
---
### 2) **Does it make a difference if payment is made on the spot or billed later?**
* No, **the timing of payment (spot vs later) does not affect TDS applicability.**
* TDS liability arises on payment or credit, whichever is earlier.
* But since food and beverages are not subject to TDS generally, timing is not a concern here.
---
### 3) **Is there any TDS on takeaways if bought frequently from the same hotel?**
* Frequent takeaways from a hotel are **treated as purchase of goods/services**.
* Again, **no TDS under 194C or 194I applies on such bills**, as they are not contracts for work or rent.
* So, no TDS deduction is required on takeaway bills, regardless of frequency.
---
### Summary Table
| Payment Type | TDS Applicability | Relevant Section | Notes |
| ------------------------------- | ----------------- | ---------------- | ------------------------------------- |
| Hotel accommodation (with rent) | Yes, @10% | Section 194I | If rent TDS conditions are met |
| Food & beverage bills (dinner) | No | - | Sale of goods/services, no TDS |
| Takeaways from hotel | No | - | Treated as purchase, no TDS |
| Other contractual services | Possibly, @2% | Section 194C | If truly a contract for work/services |
---
### Relevant circular:
* **CBDT Circular No. 715 dated 14/04/1994** (TDS on catering bills not applicable)
* Income Tax Department’s clarification on TDS on catering and restaurant bills.
---
**So for your case:**
* No TDS required on dinner bills or takeaways, even if paid after some days or frequently.
* TDS is applicable on accommodation or rent portion if applicable.
---
If you want, I can share the relevant circular link or help draft a note to explain this internally!
---
### 1) **Should TDS be deducted on payments to the hotel for business dinner?**
* **TDS under Section 194C (Contractual payments)** at 2% is generally applicable on payments for **services like catering, food, etc.,** if these are treated as a contract for providing services.
* However, **food and beverage services provided by a hotel or restaurant in normal course of business** (like a dinner or takeaway) are typically considered **sale of goods or service and not a contract for work.**
* **CBDT Circular No. 715 dated 14/04/1994** clarified that TDS under Section 194C is **not applicable on catering bills** when these are considered as supply of goods and services by the hotel/restaurant.
**So, for business dinners at a hotel:**
* Usually **no TDS deduction is required on food and beverage bills** paid to hotels/restaurants, even if it’s for a business guest.
* If the hotel bills separately for accommodation (rent), then TDS under **Section 194I** applies on accommodation charges **if conditions for rent TDS are met**.
---
### 2) **Does it make a difference if payment is made on the spot or billed later?**
* No, **the timing of payment (spot vs later) does not affect TDS applicability.**
* TDS liability arises on payment or credit, whichever is earlier.
* But since food and beverages are not subject to TDS generally, timing is not a concern here.
---
### 3) **Is there any TDS on takeaways if bought frequently from the same hotel?**
* Frequent takeaways from a hotel are **treated as purchase of goods/services**.
* Again, **no TDS under 194C or 194I applies on such bills**, as they are not contracts for work or rent.
* So, no TDS deduction is required on takeaway bills, regardless of frequency.
---
### Summary Table
| Payment Type | TDS Applicability | Relevant Section | Notes |
| ------------------------------- | ----------------- | ---------------- | ------------------------------------- |
| Hotel accommodation (with rent) | Yes, @10% | Section 194I | If rent TDS conditions are met |
| Food & beverage bills (dinner) | No | - | Sale of goods/services, no TDS |
| Takeaways from hotel | No | - | Treated as purchase, no TDS |
| Other contractual services | Possibly, @2% | Section 194C | If truly a contract for work/services |
---
### Relevant circular:
* **CBDT Circular No. 715 dated 14/04/1994** (TDS on catering bills not applicable)
* Income Tax Department’s clarification on TDS on catering and restaurant bills.
---
**So for your case:**
* No TDS required on dinner bills or takeaways, even if paid after some days or frequently.
* TDS is applicable on accommodation or rent portion if applicable.
---
If you want, I can share the relevant circular link or help draft a note to explain this internally!
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