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TDS deduction on Hotel bill above 50,000/- or 1 Lac (Income Tax)

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This query is : Resolved


( Author )
28 June 2010

Dear Sir,

Our company have to pay hotel bills payment which is above Rs. 50,000/- and Rs. 1,00,000/-.

I would like to know how much percentage of TDS we are supposed to deduct from these payments. Also educate me that TDS deduction is required on Rs. 50,000/- payment or on payment above Rs. 1,00,000/.

Waiting for your reply.


CA. BIJENDER KR. BANSAL

( Expert )
28 June 2010

Question 20 : Whether payments made to a hotel for rooms hired during the year would be of the nature of rent ?
Answer : Payments made by persons, other individuals and HUFs for hotel accommodation taken on regular basis will be in the nature of rent subject to TDS under section 194-I.

no tds is required because it is below threshold limit Rs.120000/- (From 1st July it is Rs.130000). Second it is to be checked whether it is regular basic or not. If it is one time, then no tds.


Ram Avtar Singh

( Expert )
28 June 2010

From 1st July it is Rs.180000.


dinesh upadhyay

( Author )
28 June 2010

Thanks for your reply.

Our company have to pay this for guest boarding, lodging & fooding and this is for one time only (we are not hiring these hotels on regular basis). Also note that we have to pay Rs. 145000/- to one hotel and Rs. 5,75000/- payment to a different hotels.

Are we supposed to deduct any TDS as these payment are more than threshold limit. Please clarify the TDS percentage (if applicable) to us. Also tell me what would be category of this payment.

Thanks again and waiting for ur reply.


Aditya Maheshwari

( Expert )
28 June 2010

Furthermore, for purposes of section 194-I, the meaning of ‘rent’ has also been considered. “‘Rent’ means any payment, by whatever name called, under any lease . . . or any other agreement or arrangement for the use of any land. . . .” [Emphasis supplied]. The meaning of ‘rent’ in section 194-I is wide in its ambit and scope. For this reason, payment made to hotels for hotel accommodation, whether in the nature of lease or licence agreements are covered, so long as such accommodation has been taken on ‘regular basis’. Where earmarked rooms are let out for a specified rate and specified period, they would be construed to be accommodation made available on ‘regular basis’. Similar would be the case, where a room or set of rooms are not earmarked, but the hotel has a legal obligation to provide such types of rooms during the currency of the agreement.

However, often, there are instances, where corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their executives/guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of rate-contract agreements. A rate-contract, therefore, may be said to be a contract for providing specified types of hotel rooms at pre-determined rates during an agreed period. Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. In other words, a rate-contract is different for this reason from other agreements, where rooms are taken on regular basis. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.—Circular : No. 5/2002, dated 30-7-2002.



dinesh upadhyay

( Author )
29 June 2010

Thanks again,

You gave us very useful information but I am still confused.

We have not done any agreement with these hotels and our company have to pay this for our guest boarding, lodging & fooding and this is for one time only.

Are we supposed to deduct any TDS as these payment are more than threshold limit if yes then tell me how much. Please clarify the TDS percentage (if applicable) to us. Also tell me what would be category of this payment. I would like to say how much TDS, my company have to deduct before given Rs. 1,45,000/-to one hotel and Rs. 5,75,000/- payment to other hotels.

At last I request you to take this question as example & resolve my query


Aditya Maheshwari

( Expert )
29 June 2010

Where an agreement is merely in the nature of a rate contract, it cannot be said to be accommodation ‘taken on regular basis’, as there is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. In other words, a rate-contract is different for this reason from other agreements, where rooms are taken on regular basis. Consequently, the provisions of section 194-I while applying to hotel accommodation taken on regular basis would not apply to rate contract agreements.—Circular : No. 5/2002, dated 30-7-2002.


If there is no obligation on the hotel to provide any rooms then no need to deduct TDS.


CA. BIJENDER KR. BANSAL

( Expert )
29 June 2010

iN YOUR CASE , NO TDS WILL BE DEDUCTED, BECAUSE, IT IS NOT REGULAR BASIC.


dinesh upadhyay

( Author )
29 June 2010

Thanks clearifying this issue....


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