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TDS on meeting at hotel

CA. Rashi Goyal (Chartered Accountant) (512 Points)

18 February 2009

Hi,

A company organises a meeting of 90 persons in a hotel. The hotel raises bill charging Rs. 400/- per person mentioning charges for catering services in hotel. The hotel also charged VAT on the above mentioned amount.

Now my query is whether TDS is required to be deducted on this payment or not.

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9 Replies

krishna iyer (Sr.Finance Manager) (197 Points)
Replied 18 February 2009

TDS not required. TDS is required only in cases, where somebody is rendering services to you like contract works, professional services, etc, in pursuance of an agreement between you two

CA.Tarun Maheshwari (CA, DISA) (7150 Points)
Replied 18 February 2009

In my opinion TDS is deductible. It is clearly mentioned in Explanation III of 194C(2) that the term 'Work' includes Catering Also. So it is covered under Contract Services and hence TDS deductible u/s 194C.

Section 194C (2) Explanation III.—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;

(d) catering.]

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 18 February 2009

Hi Tarun,

I do agree with your reply, can u provide any case law in support of it as the hotel management is not agreeing with it, they are saying it is not applicable if it is in hotel premises.

CA. Ashok shah (CHARTERED ACCOUNTANT) (333 Points)
Replied 18 February 2009

TDS u/s.194C is not required to be made when payment is made for serving food in a restaurant in the normal course of running of the restaurant/café. (Refer Circular No.715 dt.8 August, 1995.)

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 18 February 2009

Yes, i agree TDS is not required to be deducted if food is served in the normal course of running of restaurant/cafe. But if a meeting of 90 persons is organised that means there is also special arrangements with regard to it. The hotel is also informed before the meeting and in such cases the meeting can not be cancelled at the last minute, as the hotel has made arrangements for the same. Also the bill is not raised for the food, it is raised for the catering services. It is an special arrangement not the normal course of business.

So as per Explanation III " work" includes catering services. The act is silent with respect to the venue.

CA.Tarun Maheshwari (CA, DISA) (7150 Points)
Replied 18 February 2009

I agree with the views of Rashi. If this is the case of sale of food only according to their menu, then no tds is liable to be deducted. But if they have entered into an agreement with the party for complete arrangements and have charged it as Catering Service then it should be covered into Explanation III.

Dear Rashi, right now i dont have any case law with me I will have to find it out. I will try for the same and let you know.

CA. Rashi Goyal (Chartered Accountant) (512 Points)
Replied 18 February 2009

There is no written agreement with the hotel, and the hotel has written catering service in the invoice and charged @ 400/- per person.

Pls provide me the case law for the same. As the hotel management is not agreeing for tds, according to their view no tds is applicable if the meeting is organised in hotel premises.

Jagdish Bhalia (Practicing CA) (453 Points)
Replied 18 February 2009

There are no agreement with hotel for providing food. Foods are providing in normal course therfore provision of section 194(c) will not not apply.

Vinuraj.V.R (Accountant) (2 Points)
Replied 29 December 2018

In my opinion, tds applicable on lump sum payment like marriage function etc where irrespective of the number of persons attending the function a fixed sum is charged. No tds for usual menu rates charged per person.