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TDS applicable on FOOD bill

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Monika Khadayate

Chartered accountant

70 Points Posted on 23 May 2023

Kindly suggest whether TDS is applicable on payment made by a public sector bank to a hotel for food.

TDS Applicable on food bill?

Replies (2)

Quick Summary

TDS on food bills depends on nature of payment. If it is a catering contract, TDS under section 194C applies at 1% or 2%. For normal restaurant bills without a contract, TDS is not applicable as per CBDT circular.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

212386 Points Posted on 23 May 2023

When there is a contract of catering services between a contractor and ‘specified persons’ and a payment is made to the contractor for undertaking any ‘work’ in the nature of catering services in furtherance to the contract, TDS is to be deducted on such payment as per the specified rate.

Rate of deduction of TDS on Catering Services under Section 194C of the Income Tax Act, 1961

The rate of TDS to be deducted is as under: –
TDS shall be deducted at the following rates under Section 194C of the Act depending on whether the payment is made to an Individual/ HUF or other than an Individual/ HUF:
- - Credit is given/ Payment is made to an Individual/ HUF – 1%
  - Credit is given/Payment is made to a person other than an Individual/ HUF – 2%
When the food is served in the restaurant in a normal or ordinary course of business, it will not be considered a catering contract or service under Section 194C. – Circular No.: 715/ 1995.