Tds on payment to canteen

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 May 2012 Dear Experts,

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

chaitanya cherukuri

chaitanya cherukuri (Expert)
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10 May 2012 its debatable issue. if catering Service is involved then you need to deduct the Tax u/s 194c.

to avoid any complications better, you deduct the TDS

Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2012 Thanks Chaitanya.

Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2012 Any other view in this regard???????

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Here’s a clear take on your query about TDS on payment to a canteen/caterer:

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### 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.

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### 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.

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### 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.

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### Summary:

| Nature of Payment | TDS Applicability | Section |
| -------------------------------- | ----------------- | -------------- |
| Payment for catering services | Yes | 194C |
| Payment purely for sale of goods | No | Not applicable |

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### 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.

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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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