Tds on payment to canteen
Querist : Anonymous
Our company has provided some place in our compound to a caterer for supply of Tea and food on pre - decided Price.
Please let me know about the applicability of TDS. Should it attract u/s 194C or we are not liable to any TDS section as caterer selling us his food / tea?
Thanks
Anuj
to avoid any complications better, you deduct the TDS
Querist : Anonymous
Querist : Anonymous
---
### Scenario:
* Your company has provided space to a caterer who supplies tea and food at a pre-decided price.
* You are paying the caterer for these supplies.
---
### TDS Applicability:
**Section 194C (Payment to Contractors)** generally covers payments made to contractors for carrying out any work, including supply of labor or services.
* If the caterer is supplying food and tea as a **service provider**, i.e., running a catering service for your company, **TDS under Section 194C at 1% or 2% applies** (depending on whether the payment is to an individual/HUF or others).
* If the caterer is merely **selling goods (food/tea) as a supplier without any service element**, TDS is generally **not applicable**, as sale of goods is not covered under 194C.
---
### Practical approach:
* Usually, catering is treated as a service (providing food & beverages), so deducting TDS under **Section 194C is recommended to avoid future disputes**.
* If you do not deduct TDS and the tax department later treats it as a service, you may face issues of non-deduction.
---
### Summary:
| Nature of Payment | TDS Applicability | Section |
| -------------------------------- | ----------------- | -------------- |
| Payment for catering services | Yes | 194C |
| Payment purely for sale of goods | No | Not applicable |
---
### Recommendation:
* **Deduct TDS under Section 194C** to be safe, as catering generally involves providing service.
* Ensure proper documentation and agreements clarifying the nature of payment.
---
If you want, I can help you draft the TDS deduction clause or suggest how to record this transaction properly. Need that?
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