12 September 2013
A company orders food for their workmen.The supplier provides food to the workmen based on the orders placed by the company on a daily basis.Payment is around Rs.40000(approx) and it is made on a monthly basis.The supplier is an individual.Please advice the applicability of tds & if applicable state the respective provision in law
27 July 2025
Sure! Here’s the detailed explanation regarding **TDS on supply of lunch/food to workmen**:
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### Applicability of TDS on Supply of Food to Workmen
**1. Nature of Payment:**
* The company is paying an individual supplier for **providing food (lunch) to workmen** based on orders placed. * This is a **sale/supply of goods (food)** and **not a contract for services** like catering or supply with service element. * The payment is for **supply of food alone** and not for any other service like labour, transportation, or cooking.
**2. Relevant Sections of Income Tax Act (TDS):**
* **Section 194C**: TDS on payments to contractors/sub-contractors for carrying out work including supply of labour for carrying out any work. * **Section 194J**: TDS on fees for professional or technical services. * **Section 194I**: TDS on rent. * **Section 194M** (recently introduced): TDS on payments to individuals for professional or contract work exceeding Rs. 50 lakh.
**3. Why TDS is *Not* Applicable on Supply of Food Alone:**
* The key word in Section 194C is **“work”** — which means **service** or **contractual work**. * Just supplying food (goods) without any service or labour component **does not amount to "work" under Section 194C**. * The supplier is selling goods (food), not providing any labour or service beyond the supply. * Since no labour or service contract is involved, **Section 194C is not applicable**.
**4. What if it were Catering Services?**
* If the supplier provides **catering services** (which includes cooking, serving, managing the food at the site), then it would be a **service contract**. * In that case, **Section 194C applies**, and TDS is deductible @1% (if payment to an individual/HUF) or 2% (if payment to others).
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### Conclusion:
* In your case, **only supply of food (lunch)** to workmen is involved. * **No TDS is applicable under Section 194C or any other section** for such payment. * The supplier is selling goods, and payment for goods is **not subject to TDS**.
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### Reference:
* CBDT Circular No. 650 dated 7-6-1995 clarifies that **payment for supply of goods is not covered under Section 194C.** * Supreme Court judgment in **CIT vs. Green Park Hotel (1989)** also differentiates between supply of goods and service contract for the purpose of TDS applicability.
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If you want, I can help you draft a note for your accounts team or suppliers to clarify this.
CAclubindia
