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TDS on Canteen expenses

Sameer (Chartered Accountant) (197 Points)

18 March 2011  

Dear All,

I have a confusion about TDS. Can any one help me out regarding a query whether TDS is deductible on canteen expenses? Let me clarify the situation:

The company is having a contract whereas the contractor will supply materials as well as labour and will charge a certain amount at an agreed fixed rate on coupons used by the employees of the company.



 15 Replies

Pankaj Arora (Learner) (3129 Points)
Replied 18 March 2011



1 Like

Devendra (Chartered Accountant) (4765 Points)
Replied 18 March 2011

TDS to be dedcuted only on the Labour charges, but if he gives a consolidated bill then dedcut TDS on the whole bill amount.


Devendra K

1 Like

Sameer (Chartered Accountant) (197 Points)
Replied 18 March 2011

Thanks for your quick response but i must clarify that the contractor recovers from company Rs. 20/- on each coupon (for dinner, tea, etc.) and raises a bill for that and no other charges.

PRADEEP CHAND SHARMA (Accounts Officer) (141 Points)
Replied 18 March 2011

TDS is applicable on whole amount under 194C where Material Componnent & Service chrgs are not separable.

When Material Component & Service chrgs are separable then TDS is applicable on service part.

& second One

if  contractor recovers from company  then nothning should be taxable. it is the part of material component and Vat is applicable on Material Part.

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 18 March 2011

canteen expenses is booked as expenses in books of the client as expense in P/L account, so it does not matter that its material supply or not,

full amount should be subject to TDS u/s 194C 

CA. Santosh Prajapati (Practice) (97 Points)
Replied 18 March 2011

If bill having a information about the material & labour charges than TDS should be deducted on labour charges only not on the material amount, because 194C is applicable only for supply of labour not for material

so it is irrelevant whether it is booked as a canteen expenses OR labour charges as far as TDS purpose. 

shibu (Accountant) (325 Points)
Replied 18 March 2011

Dear All,    Will there be any difference if the employer  issues food coupons to employees for lunch during office time and deduct a portion of it say 30% from their salary ?

Pulkesh Mehta (Chartered Accountant) (243 Points)
Replied 18 March 2011

No Effect,Liability of company continues to deduct TDS due to contract between Company & Contractor.

Ritesh Jain (CA, CS in Job) (675 Points)
Replied 19 March 2011

Explanation to the word "work" in section 194C.—For the purposes of this section, the expression “work” shall also include—

          (a)  advertising;

          (b)  broadcasting and telecasting including production of programmes for such broadcasting or telecasting;

           (c)  carriage of goods and passengers by any mode of transport other than by railways;

          (d)  catering.





For catering purpose it also include the facility where a fixed sum is charged by contractor on basis of each unit for e.g200/plate. Though the material component is included but irrespective of that a fixed amount is charged TDS liability u/s 194C on whole amount arises subject to condition that the contractor is having any lower deduction certificate from Income Tax department for that period.

BUT if in the same case instead of availing catering service one would have gone to hotel/resturant and availed dine @ 200/plate , no TDS liability arises.

In later case there was no specific performance of service exclusively to the person and thus tatamounting to sale only but in case of catring service there is involvement of specific performance of service which is rided by the terms of contract.

If any body has different view or some more backup..Kindly do share.

Thank you.

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 19 March 2011

TDS is not deductible for materials portion - but here the materials definition does not cater the purpose of "purchase" under the head of P/L accounts and whole the payment is booked under expenses irrespective of the fact that materials are included or not.

if the company can book the materials contents under the head of "purchase for business and profession" then TDS would not be applicable on materials portion,


Nabeel (CA) (3288 Points)
Replied 20 March 2011

Originally posted by : Pankaj Arora



Jaykishan Thakkar (Internal Auditor) (60 Points)
Replied 20 December 2011


company paid fixed lumsup charges of rs.100000/- and contranctor provide food lower rate of rs.20/- per dish for employee. And the guest's 500 dish charges paid by company of 10000/- means both invoice diffrer raised by contractor so tds applicable on which amt ?????

Mayur Nikul Upadhyay (Article) (74 Points)
Replied 20 December 2011

The company is liable to deduct TDS @ 1/2% whichever is applicable on the whole AMOUNT as this expense is been debited to P&L account of the comp..Dis is what i feel

lokesh jain (Article Assistant) (22 Points)
Replied 29 June 2013

Whether TDS applicable on canteen contractor ??

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