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TDS on Canteen Expenses

Muralidharan (Self Employed) (1034 Points)

02 April 2009

Dear Members

A manufacturing company is having an canteen for its employees on its own premises. The canteen has been outsourced to a catering contractor. The contractor raises two separate bills every month One bill for supply of food and another bill towards labour charges.

For Example : Bill 1 - Supply of 1500 food @ Rs.20/- each for the month of Feb 2009 = Rs.30,000/-

Bill 2 - Labour charges for the month of February 2009 = Rs.10000/-

The company deducts TDS only from the labour bill. TDS is not deducted from the food supply bill.

Kindly advise whether the procedure followed by the company is correct?

with regards

Muralidharan

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20 Replies

SNEHASREE (ARTICLED ASSISTANT) (102 Points)
Replied 02 April 2009

UNDER SEC 194 C OF INCOME TAX ACT, TDS SHOULD BE DEDUCTED BOTH FOR SUPPLY OF GOODS AND FOR LABOUR SERVICES. THE PROCEDURE FOLLOWED BY THE COMPANY IS INCORRECT.

L KANAGARAJ (Assistant Manager-Finance) (615 Points)
Replied 02 April 2009

Originally posted by : SNEHASREE
"	UNDER SEC 194 C OF INCOME TAX ACT, TDS SHOULD BE DEDUCTED BOTH FOR SUPPLY OF GOODS AND FOR LABOUR SERVICES. THE PROCEDURE FOLLOWED BY THE COMPANY IS INCORRECT.	"

I agree with Snehashree.

B.Nagesh (MBA- CS Execuitve) (151 Points)
Replied 02 April 2009

TDS Should be deduct Rs.40,000/-

C.A. M.Com. Suhas A. Nagpure (CA) (1175 Points)
Replied 02 April 2009

As there is contaract between the 2 parties TDS Should be deducted on Both the bill.

S ANANDHI (ASST MANAGER) (34 Points)
Replied 02 April 2009

TDS SHOULD BE DEDUCTED ONLY ON THE LABOUR BILL. THE BILL GIVEN BY THE CANTEEN CONTRACTOR IS FOR REIMBURSEMENT OF FOOD EXPENSES, ON WHICH TDS NEED NOT BE DEDUCTED. THEREFORE THE PROCEDURE FOLLOWED BY THE COMPANY IS CORRECT.

S ANANDHI (ASST MANAGER) (34 Points)
Replied 02 April 2009

THE PROCEDURE FOLLOWED BY THE COMPANY IS CORRECT. TDS NEED NOT BE DEDUCTED ON THE BILL 1 AS IT THE BILL FOR REIMBURSEMENT OF FOOD EXPENSES.

1 Like

CA Karun Gupta (Practicing Chartered Accountant) (312 Points)
Replied 03 April 2009

I agree with S Anandhi, TDS is only required to be deducted on the labour bill and not on food supplied. As TDS is deductible on contract for work and not on contract for sale. If the contractor had raised a consolidated bill then the whole amount would have been liable to TDS.

Mehul (MIS Manager) (113 Points)
Replied 03 April 2009

Originally posted by :Karun Gupta

Is VAT or Works contract apply ( For Maharashtra State) on food supply bill?

Regards,

Mehul.

SNEHASREE (ARTICLED ASSISTANT) (102 Points)
Replied 03 April 2009

UNDER SEC 194 C OF INCOME TAX ACT, TDS SHOULD BE DEDUCTED ON THE VALUE OF CONTRACT IF CONTRACT EXISTS. IT IS NOT NECESSARY TO SEGGREGATE THE VALUE OF GOODS SUPPLIED AND LABOUR CHARGES INCURRED. CONTRACTOR IS NOT ACTUALLY REIMBURSING THE EXPENDITURE INCURRED BY HIM .IT ALSO INCLUDES PROFIT PORTION. SO THE PROCEDURE FOLLOWED BY THE COMPANY IS INCORRECT

Pawan Mittal (55 Points)
Replied 26 November 2009

if the food bill included VAT, then TDS is not applicable on food bill.

Sunil (Trader) (2611 Points)
Replied 26 November 2009

If food has been purhased from someone else and re sold to the company, then only labour charges for serving the food is the ontrat and sale of food incl. VAT is not applicable. If caterer is claiming reimbursement for food, then there should be a bill from supplier of food for that amount. For raw vegetables etc. there will be no bills unless he purchases from malls etc. It is better you deduct TDS on the full amount if food is for raw vegetables or even grains used for cooking in your premises.

Mangal Verma (Sr. Accountant) (22 Points)
Replied 05 February 2010

In our copany the caterer supply the food. against this bill we provide 50% reimb to our employee & we book the balance 50 % bill as reibursement please tell me what is the procedure to deduct the tds should i deduct the tds on whole bill or ??????????

Mangal Verma (Sr. Accountant) (22 Points)
Replied 05 February 2010

Please tell me what documents are required for a NRI to get the Pan Card from Govt. of India

Moti Lal Agrawala (AGM(Accounts)) (25 Points)
Replied 06 December 2010

In our company,we have given contract for serving food on meals basis for example Lunch @ 55/-,Dinner @ 55/- and breakfast @ 30/-. The contractor has raised bill for Rs.480000/- based on number of lunch,dinner & breakfast.Please advice whether TDS to be deducted or not.