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TDS on payment made to tour operators (Income Tax)

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This query is : Resolved



( Author )
31 October 2007

TDS on the payment made to tour operators for:
1.Air Fare
2.Package includes Fooding, Loadging,Boarding
3.Local Sight Seing
4.Service charges for aranging Pasport,Visa and other services
Please advice quoating the relevant saction.


R.V.RAO

( Expert )
01 November 2007

UNDER 194 C, IF THERE IS AN ORAL OR WRITTEN OR EVEN AN IMPLIED CONTRACT,TDS IS ATTARACTED ON TOTAL VALUE OF CONTRACT.TDS IS ON TOTAL VALUE OF CONTRACT WHICH INCLUDES VALUE OF MATERIAL AND CHARGES FOR WORKS CARRIED OUT BUT NOT SIMPLY ON CHARGES OR ONLY ON PROFIT.
IF THERE IS ANY REIMBURSEMENTS SEPARATELY CLAIMED (BUT SHOULD NOT BE INCLUDED IN THE BILL FOR CONTRACT) ,NO TDS IS APPLICABLE.
CARRIAGE OF GOODS AND PASSENGERS BY ANY MODE OF TRANSPORT OTHRTHAN RAILWAYSIS COVERED UNDER THE TERM CONTRACT.
TRANSPORT OR SERVICE CONTRACTS AND ALL TYPES OF CONTRACTS ARE COVERED
UNDER 194 C.
HOWEVER THE CENTRAL BOARD OF DIRECT TAXES HAS CLARIFIED THAT PROVISIONS OF 194 C, DO NOT APPLY TO PAYMENTS MADE TO THE AIRLINES OR THE TRAVEL AGENTS FOR PURCHASE OF TICKETS FOR AIR TRAVEL OF INDIVIDUALS.THE PROVISIONS OF 194 C HOWEVER APPLY WHEN PAYMENTS ARE MADE FOR CHARTERINFG AN AIRCRAFT FOR CARRIAGE OF PASSENGERS OF GOODS.
HUFs AND INDIVIDUALS HAVE TO DEDUCT TDS ONLY IF THEY ARE COVERED UNDER TAX AUDIT UNDER SEC 44 AB ( SALES OR TURNOVER EXCEEDING IN THE PREVIOUS FINANCIAL YEAR RS. 40 LAKHS FOR BUSINESS OR EXCEEDING RS. 10 LAKHS FOR GROSS PROFESSIONAL RECEIPTS.).
IN YOUR CASE
1. IF PAYMENTS FOR PURCHASE OF TICKETS ARE MADE TO AIRLINES OR IF YOUR TOUR OPERATOR IS A TRAVEL AGENT TDS IS NOT APPLICABLE.
2.DO NOT MAKE OUT A TOTAL CONTRACT FOR ALL 4 ITEMS STATED BY YOU .
3.ENSURE SERVICE CHARGES UNDER ITEM 4 STATED BY YOU , DO NOT EXCEED RS. 20000 SO THAT TDS IS NOT APPLICAABLE.( OR AGGREGATE IN A FINANCIAL YEAR DOES NOT EXCEED RS. 50000)
4. ENSURE REIMBUREMENTS FOR ALL POSSIBLE SERVICES DONE BY HIM AND ENSURE REIMBURSEMENTS ARE CLAIMED SEPARATELY BY YOUR OPERATOR SO THAT TDS IS NOT APPLICABLE.
R.V.RAO


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